Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. ~~47,095,835~~77,992,916 shares as of ~~August 8, 2022.~~February 9, 2023.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, future hash rate capacity, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:

The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, references to “CleanSpark,” the “Company,” “we,” “us,” and “our,” refer to CleanSpark, Inc. and its consolidated subsidiaries.

We ~~may announce material business and financial information to our investors using our investor relations website at~~ ~~https://www.cleanspark.com/investor-relations/. We therefore~~ encourage investors and others interested in CleanSpark to review the information that we make available on our website at https://www.cleanspark.com/investor-relations, in addition to ~~following~~ our filings with the SEC, webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

All reports we file with the SEC are available for download free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC’s website at www.sec.gov. We also make electronic copies of our reports available for download, free of charge, through our website at https://www.cleanspark.com/investor-relations/ as soon as reasonably practicable after filing such material with the SEC. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

Our consolidated financial statements included in this Form 10-Q are as follows:

This report on Form 10-Q for the quarter ended ~~June 30,~~December 31, 2022, should be read in conjunction with the Company's annual report on Form 10-K for the year ended September 30, ~~2021,~~2022, filed with the Securities and Exchange Commission (“SEC”) on December ~~14, 2021.~~15, 2022.

The accompanying consolidated financial statements and footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended ~~June 30,~~December 31, 2022 are not necessarily indicative of the results that can be expected for the full year.

The accompanying notes are an integral part of these unaudited consolidated financial statements.


	For the three months ended						For the nine months ended						For the three months ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021			December 31, 2022			December 31, 2021
Revenues, net
Digital currency mining revenue, net	$	30,941,726		$	8,649,440		$	104,882,043		$	16,098,643
Bitcoin mining revenue, net													$	27,746		$	36,975
Other services revenue		86,055			402,628			469,518			1,209,616			73			150
Total revenues, net		31,027,781			9,052,068			105,351,561			17,308,259		$	27,819		$	37,125

Costs and expenses
Cost of revenues (exclusive of depreciation and amortization shown below)		10,341,026			1,147,281			24,607,950			2,161,937			20,416			5,636
Professional fees		1,432,747			1,939,907			5,588,980			5,835,434			2,831			3,102
Payroll expenses		7,617,576			10,959,362			24,209,787			15,418,166			9,802			7,328
General and administrative expenses		2,113,414			1,194,340			6,708,440			2,938,543			3,724			1,816
(Gain) on disposal of assets		—			—			(642,691	)		—
Other impairment expense (related to Digital Currency)		4,418,714			3,720,481			11,452,405			3,720,481
Realized (gain) loss on sale of digital currency		5,234,482			(36,438	)		(2,026,427	)		(672,065	)
Loss on disposal of assets														—			278
Other impairment expense (related to bitcoin)														83			6,222
Realized loss (gain) on sale of bitcoin														517			(9,995	)
Depreciation and amortization		14,811,291			2,107,449			32,659,747			3,553,945			19,329			7,427
Total costs and expenses		45,969,250			21,032,382			102,558,191			32,956,441		$	56,702		$	21,814

Income (loss) from operations		(14,941,469	)		(11,980,314	)		2,793,370			(15,648,182	)
(Loss) Income from operations														(28,883	)		15,311

Other income (expense)
Other income		—			1,414			308,038			542,235
Change in fair value of contingent consideration		—			—			345,791			—			485			55
Realized gain on sale of equity security		—			105,908			665			105,908			—			1
Unrealized gain (loss) on equity security		—			(170,586	)		(1,847	)		98,914
Unrealized gain (loss) on derivative security		(1,032,579	)		(2,060,774	)		(2,143,876	)		5,319,361
Unrealized loss on equity security														—			(2	)
Unrealized (loss) gain on derivative security														(1,271	)		299
Interest income		52,355			48,242			137,608			150,705			70			33
Interest expense		(314,383	)		(18,885	)		(374,959	)		(46,299	)		(889	)		(53	)
Total other income (expense)		(1,294,607	)		(2,094,681	)		(1,728,580	)		6,170,824
Total other (expense) income														(1,605	)		333

Income (loss) before income tax (expense) or benefit		(16,236,076	)		(14,074,995	)		1,064,790			(9,477,358	)
(Loss) Income before income tax (expense) or benefit														(30,488	)		15,644
Income tax expense		0			0			0			0			—			—
Income (loss) from continuing operations	$	(16,236,076	)	$	(14,074,995	)	$	1,064,790		$	(9,477,358	)
(Loss) income from continuing operations													$	(30,488	)	$	15,644

Discontinued operations
Loss from discontinued operations	$	(13,104,147	)	$	(2,602,132	)	$	(16,089,993	)	$	(6,967,261	)
Income (loss) from discontinued operations													$	1,457		$	(1,158	)
Income tax (expense) or benefit		0			0			0			0			—			—
Loss on discontinued operations	$	(13,104,147	)	$	(2,602,132	)	$	(16,089,993	)	$	(6,967,261	)
Income (loss) on discontinued operations													$	1,457		$	(1,158	)

Net loss	$	(29,340,223	)	$	(16,677,127	)	$	(15,025,203	)	$	(16,444,619	)
Net (loss) income													$	(29,031	)	$	14,486

Preferred stock dividends		—			—			335,439			177,505			—			315

Net loss attributable to common shareholders	$	(29,340,223	)	$	(16,677,127	)	$	(15,360,642	)	$	(16,622,124	)
Net (loss) income attributable to common shareholders													$	(29,031	)	$	14,171

Other comprehensive income		28,796			—			75,388			—			29			18

Total comprehensive (loss) income attributable to common shareholders													$	(29,002	)	$	14,189

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~
~~(UNAUDITED)~~OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(Continued)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except share amounts)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
~~(UNAUDITED)~~(Unaudited, $ in thousands, except per share amounts)

ACQUISITIONS

~~SOLAR WATT SOLUTIONS, INC.~~Acquisitions Relating to Continuing Operations

Mawson Infrastructure Group - Sandersville, GA

On ~~February 23, 2021,~~October 8, 2022, the Company ~~entered into an Agreement and Plan of Merger (the “SWS Merger Agreement”) with Solar Watt Solutions, Inc. (“SWS”) and its owners (the “Sellers”). The Company accounted for~~completed the acquisition of ~~SWS as~~a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia (the “Property”), all personal property located on the Property and 6,349 application-specific integrated circuit miners (the “ASICs”) from subsidiaries of Mawson Infrastructure Group, Inc. a Delaware corporation (“Mawson”), all pursuant to a Purchase and Sale Agreement dated September 8, 2022 (the “Purchase Agreement”) and an ~~acquisition~~Equipment Purchase and Sale Agreement dated September 8, 2022 (the "Mawson Transaction").

The Company paid the following consideration to Mawson for the Property: (i) $13,500 in cash; (ii) 1,590,175 shares (the “Closing Shares”) of our common stock, par value $0.001 per share (which had a value of approximately

$4,800 based upon the closing price of the common stock on October 7, 2022), and (iii) $6,500 in seller financing in the form of a ~~business under ASC 805 – Business Combination.~~promissory note. The Company also agreed to pay up to $9,018 in cash within 15 days of the closing for the ASICs.

AtThe following additional consideration may be payable to Mawson following the ~~closing on February 24, 2021, SWS became a wholly owned subsidiary of the Company. In exchange, the Company issued (i)~~ closing:

•

~~477,703~~up to 1,100,890 shares of ~~restricted~~our common stock (the “Earn-out Shares” and, together with the Closing Shares, the “Company Shares”) (which have a ~~deemed~~ value of approximately $~~15,640,000~~3,325 ~~calculated~~ based onupon the ~~five-day average~~ closing price of the Company's common stock on October 7, 2022), based upon the number of modular data centers on the Property occupied by Mawson being emptied and made available for our use; and

•

up to an additional $2,000 in a seller-financed earn-out payable at least 60 days post-closing if the ~~trading days including~~Company is able to utilize at least an additional 150 megawatts ("MW") of power on the Property by the six month anniversary of the closing.

The Company accounted for this transaction as an acquisition of a business. The fair value of the consideration given to the Sellers in connection with the transaction and ~~immediately preceding~~ the ~~closing date~~allocation of the purchase price in accordance with ASC 820 were as follows:

F-18


($ in thousands)	Fair Value
Cash	$	22,518
Financing provided by seller		6,500
1,590,175 shares of CLSK common stock		4,803
Total purchase price	$	33,821

Contingent Consideration
Earn-out Shares of CLSK common stock		3,325
Megawatt earnout (up to $2,000 max)		2,000
Total contingent consideration	$	5,325

Total purchase sale agreement consideration-Combined	$	39,146


($ in thousands)	Preliminary Allocation at Acquisition Date
Right of use lease asset	$	5,010
Lease liability assumed		(5,100	)
Building		13,654
Infrastructure asset		4,465
Miners		12,914
Machinery and equipment		160
Goodwill		8,043
Total	$	39,146

The contingent purchase price pertaining to the 1,100,890 earn-out shares has been classified as a liability in the Consolidated Balance Sheets in accordance with ASC 480, and accordingly is reported at fair value at the end of each reporting period. As of December 31, 2022, the fair value of this contingent liability was reduced to $2,840 from $3,325 resulting in a change in fair value of contingent consideration of $~~32.74~~485 ~~per share~~in other income expense in the consolidated statements of operations and comprehensive loss.

SPRE Commercial Group Inc. and WAHA Technologies Inc. - Washington, GA

On August 17, 2022, the Company, through its wholly owned subsidiary, CSRE Properties Washington, LLC, (“CSRE”), completed the purchase of real property, together with all improvements situated thereon and all rights, easements and appurtenances belonging thereto (collectively, the “Property”), from SPRE Commercial Group, Inc. f/k/a WAHA, Inc. (“SPRE”), (the “Seller”), pursuant to a Land Purchase and Sale Agreement dated as of August 5, 2022 and amended on August 17, 2022.

Additionally, on August 17, 2022, in connection with the Land Purchase and Sale Agreement, the Company completed the purchase of a mix of S19 and S19 J Pro bitcoin miners with a total processing power equal to approximately 341,985 terahashes, pursuant to an equipment purchase and sale agreement (together with the Land Purchase and Sale Agreement, the “Acquisition”), from Waha Technologies, Inc., a Georgia corporation (“WAHA”, collectively with the Seller "WAHA & SPRE" or the "Sellers"), an affiliate of the Seller. Pursuant to the ~~Sellers,~~Land Purchase and Sale Agreement and the Equipment Purchase and Sale Agreement the Company acquired substantially all of ~~which (a)~~ WAHA & SPRE's assets. The transaction was accounted for as an acquisition of a business.

~~167,685~~ ~~shares~~Total consideration for the Property and miners consisted of (i) $1,962 in financing provided by the Seller to the Company at an interest rate of 12% per annum, to be repaid in 12 monthly installments of $174, (ii) the Company’s assumption of a mortgage with a ~~deemed value~~maximum principal amount of $~~5,490,000~~ ~~would be fully earned on closing,~~$2,158 and ~~(b)~~ an ~~additional~~ ~~310,018~~ ~~shares with a deemed fair value~~interest rate of $~~10,150,000~~ ~~were issued to an escrow agent~~13% and ~~only earned by Sellers, subject to holdback pending Sellers’ satisfaction~~(iii) $19,772 of ~~certain future milestones with~~ all such shares subject to a lock up of no less than 180 days and a leak out of no more than 10% of average daily trading value of the prior 30 days for a period of 36 months following the closing, and (ii) up to $3,850,000 in cash to the Sellers, minus the Sellers’ debt, minus the difference between the Actual Amount and Expected Amount consisting of: (a) $1,350,000 (no changes post acquisition date) in cash payable on a pro rata basis to Sellers at closing, less payment of $500,000 (no changes post acquisition date) to settle Sellers’ debt at closing, which includes (x) $200,000 (no changes post acquisition date) in cash held backconsideration paid by the Company to ~~satisfy potential damages from indemnification claims~~the Seller. Acquisition related costs of $118, consisting primarily of legal and ~~any amounts owed pursuant to post-closing adjustments, (y) an additional $100,000 (no changes post acquisition date)~~recording fees, were expensed as incurred in ~~cash held back by~~accordance with ASC 805 and are reflected in professional fees on the ~~Company to satisfy any amounts owed pursuant to post-closing adjustments,~~Consolidated Statements of Operations and (b) up to $2,500,000 (fair valued at $155,000 at acquisition date) in cash held back by the Company and only payable pro rata to Sellers upon meeting certain future milestones and subject to satisfaction of any amounts owing from SWS to the Company resulting from damages required to be indemnified under the SWS Merger Agreement.Comprehensive Loss.

The Company determined the fair value of the consideration given to the ~~sellers of SWS~~Sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 ~~was~~were as follows:

~~F-21~~F-19

Consideration:

Fair Value

Cash

$
1,350,000

Contingent consideration

155,000

310,018 shares of common stock as contingent equity
consideration

$
533,002

167,685 shares of common stock

4,649,905

Total Consideration

$
6,687,907


Consideration: ($ in thousands)	Fair Value
Cash	$	19,772
Financing provided by Seller		1,962
Mortgage assumed		2,158
Total Consideration	$	23,892

Preliminary
Allocation at
Acquisition Date

Adjustments
to Fair
Value

Final
Allocation at
Acquisition
Date

Customer List

$
5,122,733

$
(4,932,733
)

$
190,000

Goodwill

1,642,409

5,178,126

6,820,535

Other Assets and Liabilities assumed,
net

(77,235
)

(245,393
)

(322,628
)
Total

$
6,687,907

$
0

$
6,687,907


Purchase Price Allocation ($ in thousands)	Preliminary Allocation at Acquisition Date
Land	$	100
Building/Improvements		14,700
Miners		9,092
Total	$	23,892

The goodwill recorded as result of the acquisition represents the strategic benefits of growing the Company’s service portfolio and the expected revenue growth from increased market penetration. Acquired goodwill is not deductible for income tax purposes. The total purchase price was allocated to identifiable assets deemed acquired ~~and liabilities assumed,~~ based on their estimated fair values.

The ~~amortization period~~fair values of the assets have been recorded and are reflected in property and equipment, net on the Company's Consolidated Balance Sheets. The useful life for ~~customer list~~the building and improvements is estimated to be ~~1.5~~30 years years. The Company estimated the fair value of the identified customer list using a discounted cash flow model. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include the level and timing of expected incremental future cash flows over its remaining useful life, and discount rates the Company believe to be consistent with the ~~inherent risks associated with customer list, which is~~ 14%.Company's policy. The ~~Company believes the level and timing of expected future cash flows appropriately reflects market participant assumptions.~~

On January 31, 2022, the Company entered into a Merger Satisfaction and Release Agreement (the "Merger Satisfaction Agreement") with the Sellers of SWS. In consideration of fully satisfying the terms under the SWS Merger Agreement, the Company paid the Sellers $~~625,000~~ ~~and released from escrow 77,500~~ ~~shares of the Company's common stock. Additionally, the Sellers agreed to release back to the Company 232,518~~ shares of the Company's common stock held in escrow. Upon delivery of such consideration, the parties agreed that the shares and cash holdbacks contained in the original merger agreement were fully satisfied.

~~ATL DATA CENTERS, LLC~~

~~On December 9, 2020, the Company entered into an Agreement and Plan of Merger (the “ATL Merger”) with ATL Data Centers LLC (“ATL”) and its members. The Company accounted~~useful life for ~~the acquisition of ATL as an acquisition~~

~~of a business under ASC 805 – Business Combination.~~

~~At the closing, ATL became a wholly owned subsidiary of the Company. In exchange, the Company issued~~ ~~1,618,285~~ ~~shares of restricted common stock to the selling members of ATL, of which: (i)~~ ~~642,309~~ ~~shares were fully earned on closing, and (ii) an additional~~ ~~975,976~~ ~~shares were issued and held in escrow, subject to holdback pending satisfaction of certain indemnification claims and future milestones,~~ ~~with all such shares subject to a lock up of no less than 180 days and a leak out of no more than 10% of the average daily trading value of the prior 30 days.~~

~~Of the~~ ~~975,976~~ ~~shares held in escrow,~~ ~~515,724~~ ~~shares were released to the selling members of ATL and~~ ~~68,194~~ ~~shares were returned to the Company and canceled due to satisfy nonsatisfaction of certain indemnification matters during the year ended September 30, 2021. The remaining~~ ~~392,058~~ ~~shares held in escrow consist of~~ ~~72,989~~ ~~shares subject to holdback pending satisfaction of further indemnification matters and~~ ~~319,069~~ ~~shares subject to satisfaction of future milestones.~~

~~F-22~~

~~In connection with the return of the~~ ~~68,194~~ ~~shares held in escrow that were cancelled to satisfy certain indemnification matters, total consideration and the related goodwill, decreased by $892,659~~ ~~during the year ended September 30, 2021.~~

~~On June 14, 2022, of the~~ ~~156,406~~ ~~shares held in escrow,~~ ~~59,480~~ ~~shares were released to selling members of ATL and~~ ~~13,509~~ ~~shares were returned to the Company and canceled due to satisfy nonsatisfaction of certain indemnification matters.~~

The consideration remitted in connection with the ATL Merger is subject to adjustment based on post-closing adjustments to closing cash, indebtedness, and transaction expenses of ATL within 90 days of closing. The Company also assumed approximately $~~6,900,000~~ ~~in debts of ATL at closing. As part of the transaction costs, the Company issued~~ ~~41,708~~ ~~shares of common stock for an aggregate value of $545,916~~ ~~to the broker which were expensed upon issuance of the shares.~~

Purchase Price Allocation

Preliminary
Allocation at
Acquisition
Date

Adjustments
to Fair Value

Final
Allocation at
Acquisition
Date

Strategic Contract

$
7,457,970

$
2,342,000

$
9,799,970

Goodwill

14,205,245

(1,264,167
)

12,941,078

Other Assets and Liabilities assumed,
net

(479,864
)

(1,077,833
)

(1,557,697
)
Total

$
21,183,351

$
0

$
21,183,351

~~The Company made measurement period adjustments, primarily to strategic contract and goodwill, to better reflect the facts and circumstances that existed at the acquisition date.~~

The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’s service portfolio and the expected revenue growth from increased market penetration. Acquired goodwill is not deductible for income tax purposes. The total purchase priceminers was ~~allocated to identifiable assets deemed acquired, and liabilities assumed, based on their estimated fair values.~~

~~The strategic contract relates to supply of a critical input to our digital currency mining business. The other assets and liabilities assumed include $5,670,000~~ ~~of digital currency mining equipment and approximately $5,475,000~~ of notes payable related to this equipment, which was settled by the Company in December 2020. In connection with the acquisition, the Company had acquired an operating lease related to a rental building, which had a purchase option associated with the lease agreement. The Company exercised the purchase option to buy the property in May 2021 and, as a result, terminated the lease.

~~The amortization period for strategic contracts is~~ estimated to be 53 years. The Company estimated the fair value of the identified strategic contract using a discounted cash flow model. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include the level and timing of expected future cash flows, conditions and demands over its remaining useful life, and discount rates the Company believe to be consistent with the ~~inherent risks associated with strategic contract, which~~Company's policy for depreciating used miners. Land is ~~6.4%. The Company believes~~not depreciated. Financing provided by the ~~level~~Seller and ~~timing of expected future cash flows appropriately reflects market participant assumptions.~~the mortgage assumed have been recorded as loans payable and are reflected in the Company's Consolidated Balance Sheets.

Pro forma of Consolidated Financial Statements (Unaudited)

The following is the unaudited pro forma information assuming the acquisition of ~~ATL~~Mawson and ~~SWS~~WAHA occurred on October 1, ~~2020:~~2021:


	For the Three Months Ended
($ in thousands, except share and per share)	December 31, 2021
Net sales from continuing operations	$	46,137
Income from continuing operations	$	16,662
Income from continuing operations per common share - basic	$	0.41
Weighted average common shares outstanding – basic		40,279,938
Income from continuing operations per common share - diluted	$	0.41
Weighted average common shares outstanding – diluted		40,485,761

~~F-23~~

For the nine months ended

June 30, 2021

Net sales from continuing operations

$
18,638,887

Income from continuing operations

$
(9,266,397
)
Income from continuing operations per common share - basic

$
(0.34
)
Weighted average common shares outstanding – basic

27,355,111

Income from continuing operations per common share - diluted

$
(0.34
)
Weighted average common shares outstanding – diluted

27,355,111

Net sales from discontinued operations

$
6,244,406

Loss on discontinued operations

$
(7,784,411
)
Loss on discontinued operations per common share - basic

$
(0.28
)
Weighted average common shares outstanding – basic

27,355,111

Loss on discontinued operations per common share - diluted

$
(0.28
)
Weighted average common shares outstanding – diluted

27,355,111

Pro forma results of operations for the three months ended December 31, 2022, were not presented since the Mawson acquisition occurred on October 8, 2022 and the results for the 8-day period would be immaterial. The WAHA transaction was included during the entire three month period ended December 31, 2022. The unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that would have actually resulted had the acquisition occurred on the first day of the earliest period presented, or of future results of the consolidated entities. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition. All transactions that would be considered inter-company transactions for pro forma purposes have been eliminated.

Amortization expense for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021 was $~~492,097~~502 and $~~1,474,627, respectively. Amortization expense for the three and nine months ended June 30, 2021 was $523,290~~ ~~and $1,050,790~~959, respectively.

Depreciation expense for the three months ended ~~June 30,~~December 31, 2022 and 2021 was $~~14,319,194~~18,827 and $~~1,584,159, respectively. Depreciation expense for the nine months ended June 30, 2022 and 2021 was $31,185,120~~ ~~and $2,503,155~~6,468, respectively. There were 0no disposals during the three months ended ~~June 30,~~December 31, 2022. For the ~~nine~~three months ended ~~June 30, 2022,~~December 31, 2021, $~~4,390,160~~411 of property and equipment ~~was disposed of for a gain of $642,691, which included $411,484~~ ~~of property and equipment that~~ was written-off resulting in a loss of $~~278,170~~278. ~~There were~~ 0 ~~disposals during the three and nine months ended June 30, 2021.~~

The Company placed-in service property and equipment of $~~218,441,023~~79,243 during the ~~nine~~three months ended ~~June 30, 2022.~~December 31, 2022, which includes $31,192 in property and equipment acquired in the Mawson acquisition. This increase in fixed assets primarily consisted of miners ~~amounting to $214,680,416, which also includes miners received in-kind under miner purchase agreements valued at $308,038~~,and mining equipment of $~~9,344,327~~53,510, ~~and infrastructure of~~which includes $~~12,256,322~~12,914. acquired in the Mawson acquisition.

Construction in progress: The Company is expanding its facilities in ~~Georgia.~~the State of Georgia, including infrastructure, building, and land improvements to expand its mining operations.

As of ~~June 30,~~December 31, 2022 , the Company has outstanding deposits totaling $~~31,856,635~~5,814 for mining ~~equipment.~~equipment included in long-term assets on the consolidated balance sheets. The Company also has $3,500 in prepaid expense relating to payments made on the purchase of infrastructure assets. These ~~deposits are in prepayments paid to premier suppliers and manufacturers to purchase mining ASICs and equipment. The~~ prepayments will be applied to the purchase price when the vendor ships the ~~miners.~~miners and the infrastructure assets.

~~The Company had~~ ~~232,518~~ ~~shares of common stock returned back to the Company as part of the settlement of contingent consideration and holdbacks related to business acquisition.~~

As of ~~June 30,~~December 31, 2022, the Company expects to recognize $~~11,291,763~~11,691 of stock-based compensation for the non-vested outstanding options over a weighted-average period of less than one-year.

The Company grants RSUs that contain (a) service conditions, (b) performance conditions, or (c) market performance conditions. RSUs containing service conditions vest monthly or annually. RSUs containing performance conditions generally vest over ~~1 year, and the number of shares earned depends on the achievement of predetermined Company metrics.~~

When the criteria for vesting is met, the Company recognizes the expense equal to the total fair value of the common stock price on the grant date. All of the RSUs issued prior to September 30, 2021 were either vested or forfeited and cancelled.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Company granted ~~1,106,250~~390,552 RSUs, ~~which comprised~~all of ~~90,000~~ ~~that~~which are service period ~~based,~~based. Included in these grants are ~~146,250~~355,552 ~~that~~RSU granted to members of the Board of Directors, which are ~~performance condition based,~~subject to shareholder approval of an increase in the number of shares available under the Company’s equity incentive plan in March 2023 and ~~870,000~~ ~~that are market condition based awards. The market condition based RSUs consist of~~ ~~60,000~~ ~~units that are perpetual in nature,~~vest quarterly over the fiscal year 2023 and ~~therefore, are given a derived service period of~~ 5 ~~years. The remaining~~ ~~810,000~~ ~~RSUs~~ have a ~~stated service period of~~ 1 ~~year. The~~combined grant date fair value of ~~the market based RSUs are determined using the Monte Carlo simulation and is in the following range:~~ $~~11.03~~800 ~~- $~~.~~17.89~~ ~~per unit. The risk free rate, volatility, expected term, and cost of equity of these market based RSUs are as follows:~~ ~~0.14~~-~~1.26~~%, ~~111.37~~-~~172.18~~%, 1-5 ~~years, and~~ ~~20.00~~-~~21.00~~%.

As of ~~June 30,~~December 31, 2022, the Company had $~~4,055,805~~22,760 in unrecognized compensation costs related to RSU awards that it expects to recognize over a weighted average period of ~~0.52~~2.5 years.

~~14.~~

~~DISCONTINUED OPERATIONS~~

~~The Company determined to make available for sale~~. Total principal payments on loans during the asset groups related to the energy segment due to its strategic shift to strictly focus on its bitcoin mining operations. As a result, the Energy segments' results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this segment are separately reported as “assets and liabilities held for sale” as of June 30,three months ended December 31, 2022 ~~in the consolidated balance sheets. The results of operations of this segment, for all periods, are separately reported as~~was $8,430.

~~F-35~~

~~“discontinued operations” in the consolidated statements of operations and comprehensive loss.~~ ~~Provided below are the key areas~~The following is a schedule of the ~~financials that constitute the discontinued operations:~~Company's future loan payments and loan balance, net of debt discount, as of December 31, 2022:

June 30, 2022 (Unaudited)

September 30, 2021

ASSETS

Current assets

Accounts receivable, net

$
3,412,432

$
2,312,890

Inventory

1,300,609

2,592,933

Prepaid expense and other current assets

4,116,687

2,991,244

Total current assets held for sale

$
8,829,728

$
7,897,067

Property and equipment, net

11,284

197,004

Intangible assets, net

828,340

2,785,736

Goodwill

—

7,000,779

Total assets held for sale

$
9,669,352

$
17,880,586

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities

$
877,304

$
992,746

Contract liabilities

134,507

296,964

Finance lease liability

—

10,388

Total current liabilities held for sale

1,011,811

1,300,098

Long-term liabilities

Finance lease liability, net of current portion

—

35,629

Total liabilities held for sale

$
1,011,811

$
1,335,727

~~F-36~~


($ in thousands)	Maturity Date	Rate	Debt Balance, Net
Master Equipment Financing Arrangement	Apr-25	13.80%	$	15,876
SPRE Commercial Group, Inc.	Aug-23	12.00%		1,332
Marquee Funding Partners	Jul-26 - Feb-27	13.00%		2,031
Auto & Equipment Loans	Oct-28	0.99-9.20%		364
Total Loans Outstanding			$	19,603
Less: current portion of long-term loans				(7,504	)
Long-term loans, excluding current portion			$	12,099

For the three months ended

For the nine months ended

June 30,
2022

June 30,
2021

June 30,
2022

June 30,
2021

Revenues, net

Energy hardware, software and services revenue

$
601,001

$
2,863,997

$
9,157,184

$
4,985,062

Total revenues, net

601,001

2,863,997

9,157,184

4,985,062

Costs and expenses

Cost of revenues (exclusive of depreciation and amortization shown below)

658,890

2,701,536

7,317,012

4,566,077

Professional fees

1,257

107,747

63,819

381,497

Payroll expenses

1,172,738

870,834

4,005,599

2,988,328

General and administrative expenses

520,574

235,999

996,595

685,089

Impairment expense - fixed assets

31,833

0

31,833

0

Impairment expense - intangibles

1,402,016

0

1,402,016

0

Impairment expense - other

2,144,284

0

2,144,284

0

Impairment expense - goodwill

7,000,779

0

7,000,779

0

Depreciation and amortization

771,695

1,549,308

2,282,440

3,329,075

Total costs and expenses

13,704,066

5,465,424

25,244,377

11,950,066

Loss from operations

(13,103,065
)

(2,601,427
)

(16,087,193
)

(6,965,004
)

Other income (expense)

Other income

0

27

0

782

Interest expense

(1,082
)

(732
)

(2,800
)

(3,039
)
Total other income (expense)

(1,082
)

(705
)

(2,800
)

(2,257
)

Loss before income tax (expense) or benefit

(13,104,147
)

(2,602,132
)

(16,089,993
)

(6,967,261
)
Income tax (expense) or benefit

0

0

0

0

Net loss

$
(13,104,147
)

$
(2,602,132
)

$
(16,089,993
)

$
(6,967,261
)

Nine Months Ended

June 30,
2022

June 30,
2021

Cash Flows from Operating Activities

Net loss

$
(16,089,993
)

$
(6,967,261
)
Adjustments to reconcile net loss to net cash used in operating activities:

Impairment of goodwill

7,000,779

0

Impairment of fixed assets

31,833

0

Impairment of intangibles

1,402,016

0

Impairment related to working capital

2,144,284

0

Non-cash lease expense

0

40,711

Depreciation and amortization

2,282,440

3,329,075

Changes in operating assets and liabilities

Decrease in operating lease right of use liabilities

—

513,375

Decrease (increase) in contract assets, net

(162,456
)

(5,500
)
Increase (decrease) in accounts payable and accrued liabilities

(115,442
)

3,845,536

(Increase) in prepaid expenses and other current assets

(1,848,801
)

(2,200,226
)
(Increase) in accounts receivables

(1,898,084
)

(937,789
)
Decrease (Increase) in Inventory

669,938

(3,636,107
)
Change in intercompany receivables and payables

6,583,486

6,018,186

Net cash used in operating activities

$
0

$
0


($ in thousands)	5-Year Loan Maturities
Outstanding Loan	FY 2023		FY 2024		FY 2025		FY 2026		FY 2027		Thereafter		Total
Master Equipment Financing Arrangement	$	4,329	$	6,508	$	5,222	$	—	$	—	$	—	$	16,059
SPRE Commercial Group, Inc.		1,332		—		—		—		—		—		1,332
Marquee Funding Partners		306		458		521		593		153		—		2,031
Auto & Equipment Loans		44		67		70		74		59		50		364
Total principal amount of loan payments by fiscal year	$	6,011	$	7,033	$	5,813	$	667	$	212	$	50	$	19,786
Unamortized deferred financing costs and discounts on Master Equipment Financing Arrangement														(183	)
Total loan book value as of December 31, 2022													$	19,603

~~F-37~~Master Equipment Financing Agreement

~~15.~~

~~LOAN~~

On April 22, 2022, the Company entered into a Master Equipment Financing Agreement with Trinity Capital Inc., as the Lender (the “Financing Agreement”). The Financing Agreement ~~provides~~provided for up to $35 million of borrowings to finance the Company’s acquisition of blockchain computing equipment. The Company received a loan of $20 million

F-33

at closing, with the remaining $15 million fundable upon the Company's request, if requested no later than December 31, 2022, subject to certain customary conditions. The ~~loan draws have a term of~~ ~~36 months~~ ~~from issuance~~Company did not request the funding and agreed with a monthly rate factor of at least 0.032198 payable monthly on the total cost of the equipment purchased with such borrowing. The Financing Agreement contains standard financial reporting requirements and certain other affirmative obligations, failure of which to comply with could result in an event of default under the Financing Agreement. In such an event, the Lender ~~could exercise certain remedies including, but not limited~~that the related 1% loan commitment fee for the unused portion would be refunded to ~~declaring that all amounts outstanding~~the Company, which was received in December 2022. The borrowings under the Financing Agreement ~~together with accrued interest, be declared immediately due and payable. The Company received funding of $~~20 ~~million at close, which included closing costs of $701,624~~ ~~and security deposit of $643,960. The loan is~~are collateralized ~~with~~by 3,336 S19j Pro miners, which are located at our Godby, GA and ~~carries~~Norcross, GA sites.

SPRE Commercial Group, Inc.

In connection with the acquisition of WAHA, the Company entered into a financing arrangement with the seller. The loan has a term of 12 months with monthly payments of $174 and ~~effective~~a stated interest rate of ~~13.80~~12%.

Marquee Funding Partners

AsIn connection with the acquisition of ~~June 30,~~WAHA, certain assets were encumbered with mortgages which the Company assumed. The mortgages assumed have a current unpaid principal balance of $2,031 and remaining payment terms ranging from 47-54 months and annual interest of 13%.

Auto Loans

The Company has entered into various financing arrangements to purchase vehicles and non-miner equipment with combined principal amount of $364. The loans vary in terms from 48-72 months with annual interest rates ranging from 0.99% - 9.20%. The loans are secured with the purchased vehicles and equipment. During the three months ended December 31, 2022, the Company ~~had~~entered into two separate agreements for the purchase of equipment with a ~~gross balance outstanding~~combined principal of $~~18,703,448~~164, ~~netted against discount on the loans payable of $~~with terms ranging from ~~365,032~~48-60 months and interest rates ranging from 0.99%-2.90%.

~~The following is a schedule of the Company's future loan payments and loan balance, net of debt discount, as of June 30, 2022:~~

Fiscal Year

Cash Payments

Principal

Interest

Debt Discount

Loan Balance, net

2022 (three months remaining)

$
1,931,880

$
1,296,604

$
635,276

$
(31,298
)

$
1,265,306

2023

7,727,520

5,677,314

2,050,206

(124,664
)

5,552,650

2024

7,727,520

6,508,398

1,219,122

(125,799
)

6,382,599

2025

5,507,720

5,221,132

286,588

(83,271
)

5,137,861

2026

0

0

0

0

Thereafter

0

0

0

0

Total

$
22,894,640

$
18,703,448

$
4,191,192

$
(365,032
)

$
18,338,416

16.

SUBSEQUENT EVENTS

~~On July 12, 2022, the Company purchased~~ ~~1,061~~ ~~Whatsminer M30S machines that are already mining bitcoin at Coinmint's renewable-powered co-location facility.~~

~~On August 5, 2022, the Company entered into a definitive agreement (the "Transaction") to purchase certain assets for total consideration of $25,091,610, including cash, assumption of a real estate mortgage and a seller issued note payable. The assets acquired include~~ 27 acres of real property and related electrical infrastructure currently providing 36 megawatts of power, with an additional 50 megawatts of capacity expected to be available in mid-2023, located in Washington, GA. The Transaction also included mining machines with computing power of approximately 342 petahash. The Transaction is currently expected to close on or before September 5, 2022.

From ~~July~~January 1, ~~2022,~~2023, through the date of filing, the Company issued ~~5,809,774~~5,252,858 shares under its At-the-Market ~~Offering~~ Agreement resulting in net proceeds of $~~24,780,718~~12,889.

On January 13, 2023, the Company issued 1,100,890 earn-out shares of Company stock to Mawson in connection with the satisfaction of one of the contingent purchase elements of the acquisition agreement. Such shares were valued at $2,840 as of the date of issuance.

On February 7, 2023, the Company entered into an agreement to sell its battery inventory and associated energy contracts from the discontinued operations of Solar Watt Solutions, Inc. for approximately $4,610. The asset group sold were included in current assets held for sale as of December 31, 2022 and the carrying amount was consistent with the net sales. The terms of the agreement allows for the purchaser to pay the Company the sales price of the inventory over a period of up to 18 months.

~~F-38~~F-34

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

($ presented in 000's, except for average bitcoin price)

The following discussion and analysis of our financial condition and results of operations should be read together with the interim ~~condensed~~ consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021~~2022 ("Form 10-K"). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part II, Item 1A “Risk Factors” or in other parts of this Quarterly Report on Form 10-Q, as well as those identified in the “Risk Factors” section of our Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. See “Forward-Looking Statements.”

Company Overview

CleanSpark, Inc. is a leading ~~sustainable~~ bitcoin mining company incorporated in Nevada, whose common stock is listed on the Nasdaq Capital ~~Market~~.Market. The Company, through itself and its wholly owned subsidiaries, has operated in the ~~digital currency~~bitcoin mining ~~industry~~sector since December 2020. The only cryptocurrency we mine is bitcoin. From March 2014 to June 30, 2022, we provided advanced energy technology solutions to commercial and residential customers to solve modern energy challenges in the alternative energy sector. As of June 30, 2022, we deemed our energy operations to be discontinued operations due to our strategic decision to strictly focus on its bitcoin mining operations and divest of our energy assets.

We are currently working ~~with various industry participants in~~on developing a long-term sustainability and clean energy plan ~~for~~with respect to our bitcoin mining operations. ~~As part of this plan, we~~We are using ~~the available~~ clean and renewable energy resources that we currently have reasonable access to atin our bitcoin mining locations in order to further support our sustainability efforts.

Lines of Business

Bitcoin Mining

Through CleanSpark, Inc. and our wholly owned subsidiaries ATL Data Centers LLC (“ATL”) ~~and~~, CleanBlok, Inc. (“CleanBlok”), CleanSpark DW, LLC, and CleanSpark GLP, LLC, we mine bitcoin. We entered the bitcoin mining industry through our acquisition of ATL in December ~~2020. We~~2020 in College Park, GA, acquired a second data center in Norcross, GA in August 2021, a third data center and mining equipment in Washington, GA in August 2022, a fourth data center and mining equipment in Sandersville, GA in October 2022, and have had a co-location agreement with New York-based Coinmint in place since July 2021. ~~In March 2022, we entered into a colocation agreement with Lancium LLC pursuant to which we have access to up to 500 MWs of power.~~ Bitcoin mining has now become our principal revenue generating business ~~activity, and consistent with our current business strategy, we~~activity. We currently intend to ~~explore and opportunistically~~ continue to acquire additional facilities, equipment and infrastructure capacity ~~as well as evaluate other colocation opportunities, with the intention of expanding~~to continue to expand our bitcoin mining operations. ~~In line with our business strategy, on August 5, 2022, the Company entered into~~We have no intention to mine or produce any other cryptocurrencies at this time (although we held a ~~definitive agreement (the "Transaction"~~de minimis amount of USD Coin ("USDC") ~~to purchase certain assets for total consideration~~as of $25,091,610, including cash, assumption of a real estate mortgage and a seller issued note payable. The assets acquired include 27 acres of real property and related electrical infrastructure currently providing 36 megawatts of power, with an additional 50 megawatts of capacity expected to be available in mid-2023, located in Washington, GA. The Transaction also included mining machines with computing power of approximately 341 petahash.December 31, 2022).

Bitcoin was introduced in 2008 with the goal of serving as a digital means of exchanging and storing value. Bitcoin is a form of digital currency that depends upon a consensus-based network and a public ledger called a ~~“blockchain,”~~“blockchain”, which contains a record of every bitcoin transaction ever processed. The bitcoin network is the first decentralized peer-to-peer payment network, powered by users participating in the consensus protocol, with no central authority or middlemen, that has wide network participation. The authenticity of each bitcoin transaction is protected through digital signatures that correspond with addresses of users that send and receive bitcoin. Users have full control over remitting bitcoin from their own sending addresses. All transactions on the bitcoin blockchain are transparent, allowing those running the appropriate software to confirm the validity of each transaction. To be recorded on the blockchain, each bitcoin transaction is validated through a proof-of-work consensus method, which entails solving complex mathematical problems to validate transactions and post them on the blockchain. This process is called mining. Miners are rewarded with bitcoins, both in the form of newly-created bitcoins and fees in bitcoin, for successfully solving the mathematical problems and providing computing power to the network.

Factors such as access to computer processing capacity, interconnectivity, electricity cost, environmental factors (such as cooling capacity) and ~~geographic~~ location play important roles in mining. As of ~~the date of this filing,~~December 31, 2022, our operating mining units are currently capable of producing over ~~2.8~~6.2 exahash per second (“EH/s”). of computing power. In ~~cryptocurrency~~bitcoin mining, ~~“hash rate”~~“hashrate” is a measure of the computing and processing ~~capacity~~power and speed by which a mining computer mines and processes transactions on the bitcoin network. ~~Our activities in this area are complemented by our energy background and planning is underway~~

to deploy certain energy technologies from our portfolio to advance our bitcoin mining business, with the goal of maximizing energy savings, increasing total power capacity, providing resilient electricity, and reducing greenhouse gas emissions. We are expanding our bitcoin mining business with the goal of reaching 4.0 to 5.0 EH/s in hash rate capacity by December 31, 2022. We expect to ~~exceed 3~~continue increasing our computing power through 2023 and beyond as we expand our infrastructure at our owned sites in the State of Georgia, seek strategic acquisition targets, and through strategic co-location agreements. As of the date of this filing, February 9, 2023, we are capable of producing 6.6 EH/s of computing power. A company’s computing power measured in ~~capacity by September 30, 2022. Hash rate capacity~~hashrate is generally considered to be one of the most important metrics for evaluating bitcoin mining companies.

We obtain bitcoin as a result of our mining ~~operations; while~~operations, and we ~~retain a portion of the bitcoin we mine, we have sold, and intend to~~ sell bitcoin from time to time, to support our operations and strategic growth. We do not currently plan to engage in regular trading of bitcoin (other than as necessary to convert our bitcoin to U.S. dollars)~~. We do expect in the near future~~ or to engage in hedging ~~and yield generating~~ activities related to our holding of bitcoin; however, our decisions to hold or sell bitcoin at any given time may be impacted by the bitcoin market, which has been historically characterized by significant volatility. Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins are currently determined by management by analyzing forecasts ~~our operating needs~~ and monitoring the market in real time.

The value of bitcoin has historically been subject to wide swings. The following table provides a range of closing date bitcoin prices between October 1, 2021 through December 31, 2022.


Range of bitcoin prices (presented in actual amounts without rounding)
Quarterly Reporting Periods Ended	Minimum Price		Maximum Price
December 31, 2021	$	46,421	$	68,205
March 31, 2022	$	35,079	$	47,475
June 30, 2022	$	18,462	$	46,622
September 30, 2022	$	18,692	$	24,832
December 31, 2022	$	15,837	$	21,404

As of December 31, 2022, we held approximately 234 bitcoins. The carrying value of our bitcoins as of December 31, 2022 was $3,863 on our Consolidated Balance Sheet. We account for our bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our bitcoin decreases below their carrying value at any time since their acquisition. Impairment losses cannot be recovered for any subsequent increase in fair value. The carrying value of each bitcoin we held at the end of each reporting period reflects the lowest price of one bitcoin quoted on the active exchange at any time since its acquisition. Therefore, negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our bitcoin.

As of December 31, 2022, we held $10 in USDC, which is a digital currency that is fully backed by U.S. dollar assets, with the value of one USDC coin pegged 1:1 to the value of one U.S. dollar.

Through our ~~wholly-owned~~wholly owned subsidiaries CSRE Properties, LLC, CSRE Property Management Company LLC, CSRE Properties Norcross, LLC, CSRE Properties Washington, LLC and CSRE Properties ~~Norcross,~~Sandersville, LLC, we maintain real property ~~holdings for ATL and CleanBlok.~~holdings.

Discontinued Operations

The Company provides energy solutions through our wholly owned subsidiaries CleanSpark, LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and Solar Watt Solutions, Inc. These solutions consist of engineering, design and software solutions, custom hardware solutions, Open Automated Demand response (“OpenADR”), solar, energy storage for microgrid and distributed energy systems to military, commercial and residential customers in Southern California and throughout the world. The Company’s solutions are supported by a proprietary suite of software solutions that include microgrid energy modeling, energy market communications and energy management solutions. As of June 30, 2022, ~~the Company~~we deemed ~~its~~our energy operations to be discontinued operations due to ~~its~~our strategic ~~shift~~decision to strictly focus on ~~its~~ bitcoin mining operations and divest of ~~its~~the majority of our energy assets.

Results of continuing operations for the three months ended ~~June 30,~~December 31, 2022 and 2021

~~Revenues~~($ presented in 000's, except for average bitcoin price)

Bitcoin Mining Operations

~~Revenues increased~~Overview

We operate a fleet of servers commonly known as miners or ASICs (Application-Specific Integrated Circuits), which are computer chips customized for a specific use. In the case of bitcoin mining, ASICs calculate the SHA-256 algorithm as efficiently and quickly as possible in order to ~~$31,027,781 during~~compete with other miners to solve blocks. Each calculation is a hash, and each machine’s computational power is measured in terahash processed per second (“th/s”). One terahash is equal to 1 trillion hashes per second. The more terahash we produce and contribute into the ~~three months ended June 30, 2022, as compared with $9,052,068 in revenues for~~mining pool, the ~~same period ended 2021 primarily due to increase in revenues from~~higher our ~~digital currency mining operations.~~percentage of the blockchain reward.

~~Costs~~There are a variety of factors that influence our ability to mine bitcoin profitability. Our ability to mine profitability is dependent on successfully navigating these fluctuating variables, which include bitcoin’s value in USD (the volatility of which is described above), mining difficulty, global hashrate, power prices, fleet energy efficiency, data center energy efficiency, and ~~Expenses~~other factors.

The energy efficiency of a mining fleet helps drive profitability, because the most significant direct expense for bitcoin mining is power. We ~~had costs~~measure efficiency by the watts of energy required to produce each terahash of processing power (“w/th”). We operate a highly efficient fleet of miners. The table below describes our fleet as of and ~~expenses of $45,969,250~~ for the three months ended ~~June 30,~~December 31, 2022 and 2021 and also describes our computing power as compared ~~with $21,032,382 for~~to the ~~three months ended June 30, 2021.~~global computing power.


	As of the periods ended
	December 31, 2022			December 31, 2021
# of Miners		67,972			22,900
# of miners deployed and hashing		63,700			18,800
average efficiency (w/th)		31.7			35.3

Global hashrate (in terms of EH/s) (1)		274.2			190.6
CleanSpark hashrate (in terms of EH/s)		6.2			1.9
CleanSpark % of total global hashrate		2.3	%		1.0	%

	For the three months ended
	December 31, 2022			December 31, 2021
Total power usage (wholly owned and operated facilities)(in terms of kwh)		222,963,788			42,577,845
Weighted average cost per kwh	$	0.060		$	0.032

Total energy costs as % of bitcoin revenue - owned locations		70	%		8	%
Total hosting fees (including profit share) as % of bitcoin revenue - CoLocation		77	%		22	%
Total combined energy and hosting fees as % of bitcoin revenue		73	%		15	%

(1) Total global hashrate obtained from YCHARTS (https://ycharts.com/indicators/bitcoin_network_hash_rate)

As of December, 31, 2022, our operating hashrate was approximately 2.3% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 21.4 bitcoin per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

~~Our~~Power prices are the most significant cost driver for our wholly-owned locations and energy costs represented 70% and 8% as expressed as a percentage of ~~revenues was $10,341,026 for the three months ended June 30, 2022, as compared with cost of revenues of $1,147,281 for the three months ended June 30, 2021. Our cost of~~bitcoin mining revenues during the three months ended ~~June 30,~~December 31, 2022

and 2021, respectively. For our co-locations, the hosting fees (which comprise direct operating costs of the third-party operator with energy as the largest cost) and profit sharing were a combined 77% and 22% as a percentage of bitcoin mining revenues, respectively.

Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) have caused power prices to increase nationwide over the past year. All of our wholly owned and operated sites in the State of Georgia (including one that previously had a fixed-price agreement) and our hosted miners in New York State are currently subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by power purchase agreements which vary by location and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates. The average power prices we paid for the three-months ended December 31, 2022 and 2021 was ~~primarily~~$0.06 and $0.03 per kilowatt hour, respectively.

In the most recent quarter, energy prices spiked nationwide due to weather events and, as a result, we curtailed a total of 15% of our fleet, with December being the month with the greatest curtailment. Our active curtailment strategy allowed us to avoid excessive cost during these events, but it also resulted in decreased production. The management team makes real-time determinations on the need and timing during which we should curtail. We curtail when power prices exceed the value we would receive for the corresponding bitcoin reward. This means if bitcoin’s value decrease or energy prices increase, our curtailment will increase; and, likewise, when bitcoin’s value increases and energy prices decrease, our curtailment will decrease. The management team manages this decision on an hour-by-hour basis across all its sites both wholly owned and hosted.

Bitcoin mining ~~energy costs at owned facilities of $3,462,742 and mining hosting and associated energy fees of $1,147,281. Our cost of~~revenue

We earned $27,746 in revenues during the three months ended ~~June 30, 2021~~December 31, 2022, which was ~~primarily the result~~a decrease of ~~mining energy costs at owned facilities of $912,036. The increase~~$9,229, or 25%, as compared with $36,975 in ~~cost of~~ revenues ~~between the comparative periods was mainly the result of revenue growth over the same period.~~

~~Professional fees decreased to $1,432,747~~ for the three months ended ~~June 30,~~December 31, 2021, primarily due to decrease in revenues from our bitcoin mining operations. Bitcoin mining revenues are determined by two main drivers: quantity of bitcoin mined and the price of bitcoin on the date the bitcoin is mined. During the three months ended December 31, 2022 ~~from $1,939,907~~we mined 1,530 bitcoin with an average bitcoin price of $18,130 as compared to 661 bitcoin with an average bitcoin price of $55,903 during the three months ended December 31, 2021. The decrease in bitcoin mining revenue was entirely attributable to the significant decrease in the average bitcoin price in the three months ended December 31, 2022 compared to the three months ended December 31, 2021. The increase in the quantity of bitcoin mined was primarily driven by the increased number of miners in operation which increased to approximately 63,700 as of December 31, 2022. The increase in miners in operation increases our hashrate, which is our total computational power, and which when understood in the context of global hashrate, determines how much bitcoin we are able to mine.

Other services revenues

Other services revenues pertain to our data center operations for which we earned $73 in revenue for the three months ended ~~June 30, 2021. Our professional fees expenses~~December 31, 2022, which is a decrease of $77, or 52%, as compared to $150 for the three months ended ~~June 30, 2022 consisted primarily~~December 31, 2021. The Company is in the process of ~~legal expenses~~eliminating these services that do not pertain to bitcoin mining activities.

Cost of ~~$1,153,594.~~ revenues (exclusive of depreciation and amortization expense)

Our ~~professional fees expenses~~cost of revenues were $20,416 for the three months ended ~~June 30, 2021 consisted mainly~~December 31, 2022, an increase of ~~legal fees of $1,317,261.~~

~~Payroll expenses decreased to $7,617,576~~$14,780 or 262% as compared with $5,636 for the three months ended ~~June 30, 2022 from $10,959,362~~December 31, 2021. These costs were primarily related to energy costs to operate the mining equipment within our owned facilities, which was $13,267 for the three months ended ~~June 30, 2021. Our payroll expenses~~December 31, 2022, an increase of $11,893 or 866% as compared to $1,374 for the three months ended ~~June 30, 2022 consisted primarily~~December 31, 2021. We also incurred hosting fees of ~~employee and officer stock-based compensation of $5,182,763, with primarily salary and wages expense constituting remaining amounts. Our payroll expenses~~$6,229 for the three months ended ~~June 30,~~December 31, 2022, an increase of $2,057, or 49%, as compared to $4,172 for the three months ended December 31, 2021, ~~consisted~~which was the result of our co-location

agreement with Coinmint. The increases in both utilities and hosting fees were due to the increases in the volume of mining equipment installed in both our owned and co-locations as well as a general increase in the cost of each megawatt utilized. During various periods in the month of December 2022, we experienced significantly higher energy prices due to the extreme weather conditions in Georgia and New York, and accordingly, we voluntarily curtailed our bitcoin mining operations. Immediately following the extreme weather event, energy prices dropped back to a consistent rate experienced earlier in the quarter and we resumed our mining operations. We continually evaluate energy and bitcoin prices and periodically will curtail our mining operations when it is advantageous to do so.

Professional fees

Professional fees, which consists primarily of ~~employee~~legal, accounting and ~~officer~~consulting fees, were $2,831 for the three months ended December 31, 2022, a decrease of $271, or 9%, from $3,102 for the three months ended December 31, 2021. Legal expenses were $1,955 for the three months ended December 31, 2022, as compared to $290 for the three months ended December 31, 2021. This increase was primarily attributable to an increase in litigation and transactional matters requiring legal services. Other professional fees, namely accounting, audit and consulting, were $876 for the three months ended December 31, 2022 as compared to $2,812 for the three months ended December 31, 2021 a decrease of $1,936.

Payroll expenses

Payroll expenses were $9,802 for the three months ended December 31, 2022, an increase of $2,474, or 34%, from $7,328 for the three months ended December 31, 2021. Our payroll expenses include all compensation related expenses for our employees and mainly includes salaries, wages, payroll related taxes and benefits and non-cash stock-based compensation. Payroll expenses, excluding non-cash stock-based compensation, were $3,924 for the three months ended December 31, 2022, representing an increase of ~~$3,189,389, with primarily salary and wages expense constituting remaining amounts including non-recurring executive compensation of $4,700,000.~~149% from $1,579 in the three months ended December 31, 2021 mainly attributed to an increase in employee headcount.

We grant stock-based awards to certain employees as a significant portion of our payroll related costs. Stock-based compensation, which is a non-cash expense, was $5,878 for the three months ended December 31, 2022, an increase of $129, or 2%, from $5,749 for the three months ended December 31, 2021.

General and administrative expenses

General and administrative fees increased to ~~$2,113,414~~$3,724 for the three months ended ~~June 30,~~December 31, 2022 from ~~$1,194,340~~$1,816 for the three months ended ~~June 30, 2021. Our general~~December 31, 2021, representing an increase of $1,908. This increase was primarily attributable to increases in corporate overhead including, but not limited to, insurance premiums, travel expenses and ~~administrative expenses~~rent expenses.

Other impairment expense (related to bitcoin)

Impairment expense in the amount of $83 was recognized for the three months ended ~~June 30,~~December 31, 2022 ~~consisted primarily~~a decrease of ~~insurance expenses of $866,994, marketing expenses of $518,985, travel expenses of $273,891 and dues and subscriptions of $265,777. Our general and administrative expenses~~$6,139 as compared to $6,222 for the three months ended ~~June 30, 2021 consisted primarily~~December 31, 2021. The impairment expense consists of ~~marketing expenses of $791,708, dues~~bitcoin impairments due to the general decrease in bitcoin prices during the year. Decreases in bitcoin prices for periods subsequent to the mining date are recorded as impairment expense. ASC Topic 350 -Goodwill and ~~subscription expenses of $235,256, and insurance expenses of $212,630.~~Other requires subsequent increases in bitcoin prices are not allowed to be recorded (unrealized gains) unless the bitcoin is sold, at which point the gain is recognized.

Impairment expenses recorded for the three months ended June 30, 2022 were $4,418,714, and $3,720,481 impairment expenses were recorded for the three months ended June 30, 2021. Impairment expense for both periods consistedRealized gain (loss) on sale of bitcoin ~~impairment expenses.~~

Realized loss on sale of ~~digital currency increased to $5,234,482~~bitcoin was $517 for the three months ended ~~June 30,~~December 31, 2022 ~~from~~as compared to a realized gain of ~~$36,438~~$9,995 for the three months ended ~~June 30, 2021 due~~December 31, 2021. There was less volatility in bitcoin during the three months ended December 31, 2022 as compared to the ~~decrease~~three months ended December 31, 2021 which had greater volatility in bitcoin prices ~~during~~(see the ~~period.~~Range of Bitcoin Prices table above).

Depreciation and amortization

Depreciation and amortization expense increased to ~~$14,811,291~~$19,329 for the three months ended ~~June 30,~~December 31, 2022, from ~~$2,107,449~~$7,427 for the three months ended ~~June 30,~~December 31, 2021, an increase of $11,902. Depreciation expense increased by $12,359, or 191%, during the three months ended December 31, 2022, to $18,827 from $6,468 due to increase in miners and mining related equipment being placed in service during the comparative period.

~~Other income (expenses)~~

~~Other~~ Amortization expense ~~decreased to $1,294,607~~ for the three months ended ~~June 30,~~December 31, 2022 ~~compared to other expenses~~was $502, a decrease of ~~$2,094,681~~$457, or 48%, from $959 for the three months ended ~~June 30,~~December 31, 2021. ~~Our other expenses~~

Other Income (Expenses)

Other expense was $1,605 for the three months ended ~~June 30,~~December 31, 2022, compared with other income of $333 for the three months ended December 31, 2021, which is a decrease of $1,938. Other expense for the three months ended December 31, 2022 consisted primarily of an unrealized loss on derivative security of ~~$1,032,579. Our other income~~$1,271 as compared to gain for the same prior year period of $299. This change between the periods is the result of a change in fair value of the underlying instrument.

Interest expense in the current fiscal three months ended December 31, 2022 also increased by $836 to $889 from $53 in the three months ended ~~June 30, 2021 consisted primarily of an unrealized loss on derivative loss of $2,060,774.~~

~~Net Income~~

~~We recorded a net loss of $16,236,076 for the three months ended June 30, 2022, as compared with a net loss of $14,074,995 for the three months ended June 30,~~December 31, 2021. ~~The~~This increase was due ~~primarily~~to an increase in the amount of long-term debt, mainly related to the ~~increased losses from sale of digital currency and increased depreciation expense when compared to gain on the sale of digital currency and significantly lesser depreciation during the prior period.~~master equipment financing arrangement we entered in April 2022.

Net (Loss) Income from Continuing Operations

~~Results of discontinued~~Net loss from continuing operations for the three months ended ~~June 30,~~December 31, 2022 ~~and 2021~~

~~The revenues~~was $30,488 as compared to net income from ~~discontinued~~continuing operations of $15,644 for the three months ended ~~June 30, 2022~~December 31, 2021, for the reasons discussed above.

Results of Discontinued Operations

($ presented in 000's, except for average bitcoin price)

Revenues from our former energy segment, which is now classified as discontinued operations decreased ~~to $601,001 from $2,863,997~~significantly, as expected, for ~~the~~ three months ended ~~June 30,~~December 31, 2022 from three months ended December 31, 2021, ~~primarily due to the Company's strategic shift to strictly focus on its bitcoin mining operations.~~$101 and $4,118, respectively. The total costs and expenses for the three months ended ~~June 30,~~December 31, 2022 ~~increased~~decreased to ~~$13,704,066~~$353 from ~~$5,465,424~~$5,277 for the three months ended ~~June 30,~~December 31, 2021 primarily due to ~~impairment expenses related~~a winding down of the energy segment. The Company sold a portion of the assets held for sale pertaining to the discontinued energy ~~business and severance related payroll expenses.~~operations for approximately $2,523, which had a carrying amount of $813 resulting in a recognized gain of $1,710. As a result, the net income from discontinued operations for the three months ended December 31, 2022 was $1,457, as compared to a loss of $1,158 in the three months ended December 31, 2021. The Company does not expect significant discontinued operations revenues or costs in subsequent periods.

Net (Loss) Income

Net loss for the three months ended ~~June 30,~~December 31, 2022 ~~increased~~was $29,031, a fluctuation of $43,517 compared to ~~$13,104,147 from $2,602,132~~net income of $14,486 for the three months ended ~~June 30, 2021.~~December 31, 2021, for the reasons stated above.

~~Results of continuing operations for the nine months ended June 30, 2022 and 2021~~

Non-GAAP Measure

~~Revenues~~

Revenues increased to $105,351,561 during the nine months ended June 30, 2022, as compared with $17,308,259 in revenues for the same period ended 2021 primarily due to increase in revenues from our digital currency mining operations.

~~Costs and Expenses~~

We ~~had costs~~present adjusted EBITDA, which is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP"). Our non-GAAP "Adjusted EBITDA" represents earnings before interest, taxes, depreciation and amortization that excludes (i) impacts of interest, taxes, and depreciation; (ii) our share-based compensation expense, unrealized gains/losses on securities, and, changes in the fair value of contingent consideration in respect to previously completed acquisitions, all of which are non-cash items that we believe are not reflective of our general business performance, and for which the accounting requires management judgment, and the resulting expenses ~~of $102,558,191~~could vary significantly in comparison to other companies; (iii) non-cash impairment losses related to long-lived assets (including goodwill) and digital assets, which include our bitcoin for which the ~~nine months ended June 30, 2022, as compared with $32,956,441 for~~accounting requires significant estimates and judgment, and where the ~~nine months ended June 30, 2021.~~

Our cost of revenues was $24,607,950 for the nine months ended June 30, 2022, as compared with cost of revenues of $2,161,937 for the nine months ended June 30, 2021. Our cost of revenues during the nine months ended June 30, 2022 was primarily the result of mining energy costs at owned facilities of $7,375,070,resulting expenses could vary significantly in comparison to other companies; (iv) realized gains and mining hosting and associated energy fees of $16,626,999. Our cost of revenues during the nine months ended June 30, 2021 was primarily the result of mining energy costs at owned facilities of $1,802,556. The increase in cost of revenues between the comparative periods was mainly the result of revenue growth over the same period.

Professional fees increased to $5,588,980 for the nine months ended June 30, 2022 from $5,835,434 for the nine months ended June 30, 2021. Our professional fees expenses for the nine months ended June 30, 2022 consisted primarily of legal expenses of $2,013,440, accounting and tax expenses of $1,778,227, and subcontractor expenses of $736,653. Our professional fees expenses for the nine months ended June 30, 2021 consisted mainly of legal expenses of $4,143,460 largely related with litigation expenses and consulting fees of $988,393.

Payroll expenses increased to $24,209,787 for the nine months ended June 30, 2022 from 15,418,166 for the nine months ended June 30, 2021. Our payroll expenses for the nine months ended June 30, 2022 consisted primarily of employee and officer stock-based compensation of $17,441,828, with primarily salary and wages expense constituting remaining amounts. Our payroll expenses for the nine months ended June 30, 2021 consisted primarily of employee and officer stock-based compensation of $4,751,747, with primarily salary and wages expense constituting remaining amounts including non-recurring executive compensation of $4,700,000.

General and administrative expenses increased to $6,708,440 for the nine months ended June 30, 2022 from $2,938,543 for the nine months ended June 30, 2021. Our general and administrative expenses for the nine months ended June 30, 2022 consisted primarily of insurance expenses of $2,319,797, marketing expenses of $1,510,671, dues and subscriptions expenses of $696,278, travel expenses of $555,277, and utilities expenses of $352,949. Our general and administrative expenses for the nine months ended June 30, 2021 consisted primarily of marketing expenses of $1,730,489, dues and subscriptions of $569,187, and insurance expenses of $450,458.

Impairment expenses recorded for the nine months ended June 30, 2022 were $11,452,405 and $3,720,481 impairment expenses were recorded for the nine months ended June 30, 2021. Impairment expense for both periods consistedlosses on sales of bitcoin ~~impairment expenses.~~

~~Realized gain on sale~~and equity securities, the amounts of digital currency increased to $2,026,427 for the nine months ended June 30, 2022 from a realized gain of $672,065 for the nine months ended June 30, 2021 due to the decrease in bitcoin prices during the period.

Depreciation and amortization expense increased to $32,659,747 for the nine months ended June 30, 2022, from $3,553,945 for the nine months ended June 30, 2021 due to increase in mining related equipment being placed in service during the comparative period.which are

~~Other income (expenses)~~

~~Other expense increased~~directly related to ~~$1,728,580 for~~ the ~~nine months ended June 30, 2022 compared~~unrealized gains and losses that are also excluded; (v) legal fees related to ~~other income~~litigation and various transactions, which fees management does not believe are reflective of ~~$6,170,824 for the nine months ended June 30, 2021. Our other expense for the nine months ended June 30, 2022 consisted primarily~~our ongoing operating activities; (vi) gains and losses on disposal of ~~an unrealized loss on derivative security~~assets, majority of ~~$2,143,876. Our other income for the nine months ended June 30, 2021 consisted primarily of unrealized gain on derivative security of $5,319,361.~~which are related to obsolete or unrepairable machines that are no longer deployed; and (vii) gains and losses related to discontinued operations that would not be applicable to our future business activities.

Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, as well as providing the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time. In addition to management's internal use of non-GAAP adjusted EBITDA, management believes that adjusted EBITDA is also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis. Management believes the foregoing to be the case even though some of the excluded items involve cash outlays and some of them recur on a regular basis (although management does not believe any of such items are normal operating expenses necessary to generate our bitcoin related revenues). For example, we expect that share-based compensation expense, which is excluded from Adjusted EBITDA, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Additionally, management does not consider any of the excluded items to be expenses necessary to generate our bitcoin related revenue.

9We have also excluded impairment losses on assets, including impairments of its bitcoin in its non-GAAP financial measure, which may continue to occur in future periods as a result of our continued holdings of significant amounts of bitcoin.

The Company's adjusted EBITDA measure may not be directly comparable to similar measures provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently. The Company's adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating (loss) income or any other measure of performance derived in accordance with GAAP. Although management utilizes internally and presents adjusted EBITDA, we only utilize that measure supplementally and do not consider it to be a substitute for, or superior to, the information provided by GAAP financial results.

Accordingly, adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in our Consolidated Financial Statements, which have been prepared in accordance with GAAP.

The following is a reconciliation of our non-GAAP adjusted EBITDA to its most directly comparable GAAP measure (i.e., net (loss) income) for the periods indicated:


	For the Three Months Ended December 31,
($ in thousands)	2022			2021
Reconciliation of non-GAAP adjusted EBITDA
Net (loss) income	$	(29,031	)	$	14,486
(Income) loss on discontinued operations		(1,457	)		1,158
Other impairment loss (related to bitcoin)		83			6,222
Depreciation and amortization		19,329			7,427
Share-based compensation expense		5,878			5,749
Change in fair value of contingent consideration		(485	)		(55	)
Realized loss (gain) on sale of bitcoin		517			(9,995	)
Realized gain on sale of equity security		—			(1	)
Unrealized loss of equity security		—			2
Unrealized loss (gain) of derivative security		1,271			(299	)
Interest income		(70	)		(33	)
Interest expense		889			53
Gain on disposal of assets		—			278
Legal fees and litigation related expenses		1,163			136
Legal fees related to financing & business development transactions		542			—
Non-GAAP adjusted EBITDA	$	(1,371	)	$	25,128

~~Net Income~~

We recorded a net income of $1,064,790 for the nine months ended June 30, 2022, as compared with a net loss of $9,477,358 for the nine months ended June 30, 2021. The increase was primarily due to increase in revenues from our digital mining operations.

~~Results of discontinued operations for the nine months ended June 30, 2022 and 2021~~

The revenues from discontinued operations for the nine months ended June 30, 2022 increased to $9,157,184 from $4,985,062 for the nine months ended June 30, 2021. The total costs and expenses for the nine months ended June 30, 2022 increased to $25,244,377 from $11,950,066 for the nine months ended June 30, 2021 primarily due to impairment expenses relatedfollowing is a reconciliation of fair market value of our bitcoin holdings to the ~~energy business~~current carrying value at December 31, 2022 and ~~severance related payroll expenses. As a result, the net loss for the nine months ended June~~September 30, ~~2022 increased to $16,089,993 from $6,967,261 for the nine months ended June 30, 2021.~~2022:


	December 31, 2022				September 30, 2022
	Carrying Value (1)		Fair Market Value (2)		Carrying Value (1)		Fair Market Value (2)
Number of Bitcoins held		234		234		595		595
Value per coin (1) (2)	$	16,520	$	16,557	$	18,735	$	19,403
Total	$	3,863	$	3,872	$	11,147	$	11,545

(1)

Value per coin is the average book value per coin determined by the number of coins held as of the balance sheet date divided by the carrying value.

(2)

Value per coin is the quoted market price as of the balance sheet date.

Liquidity and Capital Resources

($ presented in 000's)

Our primary requirements for liquidity and capital are working capital, inventory management, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we further develop and grow our business. Our principal sources of liquidity have been and are expected to be our cash and cash equivalents and ~~digital currency~~bitcoin inventory.

As of ~~June 30,~~December 31, 2022, we had total current assets of ~~$29,448,673,~~$21,186, consisting of cash and cash equivalents, accounts receivable, inventory, prepaid expenses and other current assets, ~~digital currency, investment in equity security,~~bitcoin, investment in debt security and related derivative asset, and current assets held for sale, and total assets in the amount of ~~$411,058,824.~~$486,789. Our total current liabilities and total liabilities as of ~~June 30,~~December 31, 2022 were ~~$19,986,294~~$41,600 and ~~$34,192,029~~$59,754, respectively. We had negative working capital of ~~$9,462,379~~$20,414 as of ~~June 30,~~December 31, 2022. We sell the bitcoin we mine to fund operations and to fund capital expenditures. In addition, we have access to equity financing through our At-the-Market offering facility and debt financing through the lending arrangement we entered into in April 2022 (see Note 10-Stockholders' Equity, Note 15 - ~~Loan~~Loans and Note 16 - Subsequent Events to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).

We believe our cash and cash equivalents on hand, together with cash we expect to generate from future operations, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt ~~financings or enter into credit facilities for other reasons.~~financings. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic, including variants, rising inflation and interest rates, and the conflict between Russia and Ukraine have resulted in, and may continue to result in, significant disruption and volatility in the global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Material Cash Requirements

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of ~~June 30,~~December 31, 2022, while others are considered future commitments. Our contractual obligations primarily consist of cancelable purchase commitments with various parties to purchase goods or services, primarily miners and equipment, entered into in the normal course of business and operating leases.

For information regarding our other contractual obligations, refer to Note ~~12,~~13 - Commitments and

Contingencies ~~on the~~in this Form 10-Q for the quarterly period ended ~~June 30,~~December 31, 2022, and Note 15 - Commitments and Contingencies included in our Annual Report on Form 10-K as filed with the SEC on December ~~14, 2021.~~15, 2022.

Operating Activities

Operating activities provided ~~$52,479,289~~$4,703 in cash for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, as compared ~~with using $21,128,132~~to $12,841 in cash for the ~~nine~~three months ended ~~June 30,~~December 31, 2021. Our sale of ~~digital currencies~~bitcoin of ~~$108,070,207,~~$34,067, depreciation and amortization of ~~$34,805,307,~~$19,329, stock based compensation of ~~$17,515,870,~~$5,878, decrease in prepaid and other current assets of $1,862, increase in accounts payable and accrued liabilities of $3,265, and impairment of ~~digital currency~~bitcoin of ~~$11,452,405~~$83 were the main components of our operating cash ~~flow~~inflow for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, offset primarily by ~~the increase in digital currency~~cash outflows for bitcoin mining of ~~$104,882,043,~~$27,746, net loss of ~~$15,025,203,~~$29,031, and ~~increase in prepaid and other current assets~~long-term deposit paid of ~~$11,545,789.~~$2,941. Our ~~use of net~~ cash inprovided by operating activities during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 were primarily driven by net ~~loss~~income for the period of ~~$16,444,619, digital currency mining~~$14,486, proceeds from the sale of ~~$16,098,643, and unrealized gain on derivative asset~~bitcoin of ~~$5,319,361, offset by~~$33,965, impairment of bitcoin of $6,222, stock based compensation of ~~$8,599,029,~~$5,749, depreciation and amortization of ~~$6,883,020, impairment~~$7,427, partially offset by mining of ~~digital currency~~bitcoin of ~~$3,720,481, and increase~~$36,975, realized gain on sale of bitcoin of $9,995, decrease in accounts payable and accrued liabilities of ~~$3,699,298.~~$5,549, increase in prepaid expenses and other current assets of $3,310.

Investing Activities

Investing activities from continuing operations used ~~$153,495,072~~$59,011 during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, as compared with using ~~$193,596,196~~$94,003 for the ~~nine month period~~three months ended ~~June 30,~~December 31, 2021. Our payments on miner ~~deposits~~(including miner deposits) of ~~$124,272,481,~~$31,540, the acquisition of Mawson of $22,518, and purchase of fixed assets of ~~$32,104,835, and sale of miners of $3,497,654~~$4,953, were the main components of our investing cash flow for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. Our payments on miner deposits of ~~125,855,501,~~$70,634 and purchase of fixed assets of ~~$60,536,521, and our investment in infrastructure development of $6,431,664~~$21,430, were the main components of our investing cash flow for the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

Financing Activities

Cash flows generated from financing activities of continuing operations during the ~~nine~~three months ended ~~June 30,~~December 31, 2022 amounted to ~~$85,637,138,~~$32,971, when compared to ~~$233,807,996~~$68,179 for the ~~nine~~three months ended ~~June 30,~~December 31, 2021. Our cash flows from financing activities for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 consisted primarily of proceeds from underwritten offering of ~~$67,988,993 and equipment backed loan~~$41,344 partially offset by payments on loans in the amount of ~~$18,704,416.~~$8,430. Our cash flows from financing activities for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 mainly consisted of ~~repayments of $5,865,476 on promissory notes, proceeds from exercise of options and warrants of $3,731,563 and~~ proceeds from underwritten offerings of ~~$236,123,384.~~$67,989.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses. We evaluate our estimates and assumptions on an ongoing basis, and base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for the judgments we make about the carrying value of assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from these estimates. Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and statement of cash flows.

There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Form 10-K. For a description of our critical accounting policies and estimates, see Part I, Item 1, Note 2, ~~"Summary~~

"Summary of Significant Accounting Policies" in our notes to the consolidated financial statements in this Quarterly Report.

Recent Accounting Pronouncements

Please refer to Note 2 in our unaudited ~~condensed~~ consolidated financial statements contained elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report on Form 10-Q.

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~

The Company is exposed to several market risks in its normal business activities. The types of market risks the Company is exposed to are the market price of bitcoin, banking, costs of mining, and liquidity risk. We do not believe that inflation has had a material effect on our business, financial condition or results of operations. Because our assets are primarily short-term and liquid in nature, they are generally not significantly impacted by inflation. The rate of inflation does, however, affect our expenses, including employee compensation, communications and information processing and office leasing costs, which may not be readily recoverable. To the extent inflation results in rising interest rates and has adverse impacts upon securities markets, it may adversely affect our results of operations and financial condition.

We continue to monitor rising inflationary pressures, including rising freight and import costs, in an attempt to minimize its effect through pricing strategies and cost reductions. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and operating results.

~~Market Price Risk of Bitcoin.~~ We acquire bitcoin from our daily operations of mining and, as of June 30, 2022, we held approximately 562.87 bitcoins. The carrying value of our bitcoins as of June 30, 2022 was $10,538,120 on our Consolidated Balance Sheet. We account for our bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our bitcoin decreases below their carrying value at any time since their acquisition. Impairment losses cannot be recovered for any subsequent increase in fair value. For example, the market price of one bitcoin in our principal market ranged from $17,733 - $68,205 during the nine months ended June 30, 2022, but the carrying value of each bitcoin we held at the end of the reporting period reflects the lowest price of one bitcoin quoted on the active exchange at any time since its acquisition. Therefore, negative swings in the market price of bitcoin could have a material impact on our earnings and on the carrying value of our digital assets.

~~Banking Risk.~~ A number of companies that engage in bitcoin and/or other cryptocurrency-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services. Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions. To the extent that such events may happen to us, they could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account.

~~Costs of Mining Risk.~~ Mining operations are costly and our expenses may increase in the future. Increases in mining expenses may not be offset by corresponding increases in revenue. Our expenses may become greater than we anticipate, and our investments to make our business more cost-efficient may not succeed. Bitcoin mining operations are also subject to increased costs as a result of the periodically increasing mining difficulty rates. Increases in our costs without corresponding increases in our revenue would adversely affect our profitability and could seriously harm our business and an investment in us.

We do not believe that inflation has had a material adverse effect on our business, financial condition or results of operations. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.

~~Liquidity Risk.~~ ~~Liquidity risk arises from the general funding needs of the Company's activities and in the management of the Company's assets and liabilities.~~

Item 4. Controls and Procedures

Limitation on Effectiveness of Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of ~~June 30,~~December 31, 2022, our disclosure controls and procedures ~~were not effective due to the material weaknesses in our internal control over financial reporting described below.~~are effective.

~~Material Weaknesses and Remediation Plan~~

We identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in management assessment: (1) The Company did not adequately implement or properly maintain controls over its financial close and reporting process and its process over the recording of energy and other services revenue and (2) the Company did not adequately design and maintain effective general information technology controls over third-party information systems and applications that are relevant to the preparation of the Company’s financial statements. Specifically:

•

~~Financial Close and Reporting: Controls over financial statement reviews, specific to the appropriate reconciliation of certain balance sheet accounts, were not operating effectively.~~

▪

Recording of Revenues for certain non-principal revenue generating subsidiaries: Controls over the recording and processing of revenue for certain non-principal revenue generating entities, specifically, p2kLabs, Inc, GridFabric, LLC and CleanSpark, LLC, lack the level of precision necessary to ensure the completeness and accuracy of revenue recorded.

•

Information and Technology Controls: Certain individual control deficiencies related to information technology (“IT”) general controls and report reviews aggregate into a material weakness, as follows:

▪

~~Certain process-level and IT-dependent controls over user access to IT programs and applications, specifically utilized for hosting services and file storage, were not effective.~~

▪

~~Controls relating to the evaluation of service organization controls reports were not performed over certain third-party service providers to cover the entire fiscal year.~~

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. To date, the remediation actions include the following:

•

~~appointment of additional qualified staff;~~

•

~~implementation of additional monitoring of controls to improve documentation of internal control procedures;~~

•

~~expanding the management and governance over IT system controls; and~~

•

~~implementation of enhanced process controls around internal user access management including provisioning, removal, and periodic review.~~

While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period, we are committed to continuous improvement and will continue to diligently review our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

~~Other than remediation actions related to the material weaknesses in our internal controls described above, there has~~There have been no ~~change~~changes in our internal control over financial reporting (as ~~that term is~~ defined in Rules 13a-15(f) ~~and~~or 15d-15(f) ~~under~~of the Exchange Act) that occurred during the first quarter ~~ended June 30, 2022~~of fiscal year 2023 that ~~has~~have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial reporting.

1415

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time subject to various claims, lawsuits, and other legal and administrative proceedings arising in the ordinary course of business. See Note 12 - Commitments and Contingencies to our consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

~~Please carefully consider~~In addition to the other information set forth in this ~~Quarterly Report on Form 10-Q and~~report, you should carefully consider the ~~risk~~ factors discussed in ~~Part I, Item I A. of our~~the “Risk Factors” section contained in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2021, which could~~2022, together with the cautionary statement under the caption “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q. These described risks are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or ~~future~~operating results. ~~In evaluating our business, you should carefully consider~~

We may face several risks due to disruptions in the ~~risk factors discussed in our Annual Report on Form 10-K, as updated below and by our other filings under the Exchange Act. Except as disclosed below, there have been no material changes~~crypto asset markets, including but not limited to the risk ~~factors discussed~~from depreciation in our ~~Annual Report on Form 10-K for~~stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and government investigations, and risks from price declines or price volatility of crypto assets.

In the ~~year ended September 30, 2021. The occurrence~~second half of ~~any~~2022 and beginning of 2023, some of the ~~risks discussed in such filings, or other events that we do not currently anticipate or that we currently deem immaterial, could harm our business, prospects, financial condition~~well-known crypto asset market participants, including Celsius Network, Voyager Digital Ltd., Three Arrows Capital, and ~~results of operations. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.~~

~~Bitcoins and other digital assets we mine or hold for our own account may be subject to loss, theft or restriction on access.~~

There is a risk that some or all of our bitcoins could be lost or stolen. Bitcoins are stored in and accessed by cryptocurrency sites commonly referred to as “wallets.” A hot wallet refers to any cryptocurrency wallet that is connected to the Internet. Generally, hot wallets are easier to set up and access than wallets in cold storage, but they are also more susceptible to hackers and other technical vulnerabilities. Cold storage refers to any cryptocurrency wallet that is not connected to the Internet. Cold storage is generally more secure than hot storage, but is not ideal for quick or regular transactions. When we keep our bitcoin in cold storage, we may experience lag time in our ability to respond to market fluctuations in the price of our cryptocurrency assets.

We currently mine bitcoin by contributing to and benefiting from our pools’ processing power. Our share of bitcoins mined from our pools are initially received by us in wallets we control, which are maintained by Coinbase Custody Trust Company,Genesis Global Holdco LLC a New York State limited purpose trust company and an affiliate of Coinbase Inc., a U.S. based digital assets exchange. We maintain the majority of our bitcoin in cold storage with a minority allocation kept in hot wallets for working capital purposes. Bitcoins we mine or hold for our own account may be subject to loss, theft or restriction on access. Hackers or malicious actors may launch attacks to steal, compromise or secure bitcoins, such as by attacking the bitcoin network source code, exchange miners, third-party platforms (including Coinbase), cold and hot storage locations or software, or by other means. We may be in control and possession of substantial holdings of bitcoin, and as we increase in size, we may become a more appealing target of hackers, malware, cyber-attacks or other security threats. Any of these events may adversely affect our operations and, consequently, our investments and profitability.

Furthermore, if Coinbase or another bitcoin custodian where we deposit our bitcoins experiences financial difficulties, there is a risk that creditors of such custodian will be able to treat its bitcoin as an asset of the custodian which may resultdeclared bankruptcy, resulting in a loss of ~~some or~~confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly thereafter, FTX and its subsidiaries filed for bankruptcy.

In response to these events, the digital asset markets, including the market for bitcoin specifically, have experienced extreme price volatility and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital assets markets and in bitcoin. These events have also negatively impacted the liquidity of the digital assets markets as certain entities affiliated with FTX engaged in

significant trading activity. If the liquidity of the digital assets markets continues to be negatively impacted by these events, digital asset prices (including the price of bitcoin) may continue to experience significant volatility and confidence in the digital asset markets may be further undermined. These events are continuing to develop and it is not possible to predict at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole.

Although we had no direct exposure to FTX or any of the above-mentioned cryptocurrency companies nor any material assets that may not be recovered or may otherwise be lost or misappropriated due to the bankruptcies, the failure or insolvency of large exchanges like FTX may cause the price of bitcoin to fall and decrease confidence in the ecosystem, which could adversely affect an investment in us. Such market volatility and decrease in bitcoin price have had a material and adverse effect on our results of operations and financial condition and we expect our results of operations to continue to be affected by the bitcoin price as the results of our operations are significantly tied to the price of bitcoin. ~~For example, as disclosed~~If we do not continue adjusting our short-term strategy to optimize our operating efficiency in ~~Coinbase’s Quarterly Report~~the current dynamic market conditions, such market conditions could have a further negative result on ~~Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 10, 2022,~~our business, prospects or operations.

Potential that, in the event of ~~Coinbase’s~~a bankruptcy ~~the crypto assets Coinbase holds~~filing by a custodian, bitcoin held in custody ~~on behalf~~could be determined to be property of ~~its customers~~a bankruptcy estate and we could be considered ~~to be~~ a ~~part~~general unsecured creditor thereof.

All of the bitcoin we hold is held in either cold or hot storage by Coinbase. The treatment of bitcoins held by custodians that file for bankruptcy ~~estate and subject to bankruptcy proceedings, and such customers could be treated as Coinbase’s general unsecured creditors. If~~protection is uncharted territory in U.S. Bankruptcy law. We cannot say with certainty whether our bitcoin held in custody by Coinbase, ~~is subject to~~should it declare bankruptcy, ~~proceedings,~~would be treated as property of the bankruptcy estate and, accordingly, whether we ~~may~~would be treated as a general unsecured creditor ~~of Coinbase or another crypto custodian, and we may lose some or all~~with respect of our bitcoin held atin custody by Coinbase.

~~Inflation in the global economy could negatively impact our business and results of operations.~~

General inflation in the United States, Europe and other geographies has risen to levels not experienced in recent decades. General inflation, including rising prices for energy, metals, components, and other inputs as well as rising wages negatively impact our business by increasing our operating costs.

As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations, and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.

~~Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.~~

The global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If the equity and credit markets continue to deteriorate, or the United States enters a recession, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive. As a result, our business, results of operations and price of our common stock may be adversely affected.

If we ~~engage in acquisitions to grow our business, we will incur~~are treated as a ~~variety of costs and may potentially face numerous risks that could adversely affect our business and operations and cause our stock price to decline.~~

If appropriate opportunities become available, we may seek to acquire businesses, assets, technologies or products to enhance our business. In connection with any acquisitions, we could issue additional equity securities, which would dilute our stockholders, incur substantial debt to fund the acquisitions or assume significant liabilities.

Acquisitions involve many and diverse risks and uncertainties, including problems integrating the purchased operations, assets, technologies or products as well as unanticipated costs, liabilities, and economic, legal and regulatory challenges and we may fail to successfully integrate acquired companies, or retain key personnel from the acquired company. Acquisitions may require us to record goodwill and non-amortizable intangible assets that will be subject to testing on a regular basis and potential period impairment charges, incur amortization expenses related to certain intangible assets, and incur write offs and restructuring and other related expenses, any of which could harm our operating results and financial condition.

New business strategies, especially those involving acquisitions, are inherently risky and may not be successful. Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations and could cause our stock price to decline.

~~The definitive agreement with Waha, Inc. and Waha Technologies, Inc. may not be consummated, and even if consummated, may not be successful.~~

There can be no assurance that the proposed transaction with Waha, Inc. and Waha Technologies, Inc. will be consummated. The transaction is subject to the satisfaction or waiver of specific and other customary closing conditions. The failure to satisfy all of the required conditions could delay the completion of the transaction for a significant period of time or prevent them from occurring at all. There can be no assurance that these and other conditions to closing will be satisfied in a timely manner or at all. We are also subject to restrictions on our business while the transaction is pending, including by conducting the business only in the ordinary course and conferring with Waha, Inc. and Waha Technologies, Inc. regarding any material matters relating to the business. These restrictions may prevent us from pursuing attractive business opportunities or responding effectively to competitive pressures and industry developments that may arise prior to the completion of the pending transaction or otherwise adversely affect our ability to execute on our business strategy, which could adversely affect our business or financial condition. Our failure to consummate the transaction could result in negative publicity and a negative impression of our company. Further, any disruptions to our business resulting from the proposed transaction, including any adverse changes in our relationships with our employees and customers, could continue or accelerate in the event that the transaction is not

completed. Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed transaction. Many of these fees and costs will be payable by us even if the proposed transaction is not completed and may relate to activities that we would not have undertaken in the absence of the transactions contemplated by the agreement with Waha, Inc. and Waha Technologies, Inc. Even if we complete the transaction with Waha, Inc. and Waha Technologies, Inc., we may not realize the expected benefits of the transaction. In changing the distribution system we have relied on in the past, we may disrupt our operations and cause delays in sourcing products for our customer or in completing services for them. While we believe we will experience cost savings because of this transaction, we may never realize those savings. Any of these risks could materially and adversely impact our ongoing business, financial condition, financial results, and stock price.

~~The optimization of our company’s future profitability depends, in part, upon the success of our evaluation of strategic alternatives for our energy business operations.~~

We have been evaluating strategic alternatives for the energy business operations, as we made a strategic decision to streamline our business and focus on our bitcoin mining operations. As of June 30, 2022 and September 30, 2021, we classified the assets within the energy business as held for sale on our consolidated balance sheets. We are evaluating strategic exit opportunities for the energy business operations and are committed to exiting this business in a manner that is in the best interest of our shareholders. It is possible that our exit strategy may ultimately include winding-down or closing the remaining energy business operations.

If our evaluation process does not result in the successful consummation of strategic alternatives, or if we are otherwise unable through such consummation to realize our goals for the energy business operations,general unsecured creditor, we may not be able to ~~optimize~~recover our ~~future profitability,~~bitcoin in the event of a Coinbase bankruptcy or a bankruptcy of any other custodian we may use in the future.

Our indebtedness could adversely affect our financial health and prevent us from fulfilling our debt obligations ($ in Thousands - 000's).

In April 2022, we entered into a Master Equipment Financing Agreement with Trinity Capital Inc., as the lender (the “Financing Agreement”). The Financing Agreement provided for up to $35,000 of borrowings to finance our acquisition of blockchain computing equipment. We received a loan of $20,000 at close, with the remaining $15,000 not requested for funding and cancelled. As of the date of this filing $15,867 in principal is outstanding and due to Trinity Capital Inc.

The borrowings under the Financing Agreement are collateralized by 3,336 S19j Pro miners, which are located at our Godby, GA and Norcross, GA sites. The value of the miners collateralizing the borrowings under the Financing Agreement may be negatively impacted by adverse events affecting the crypto asset markets and/or volatility in the price of bitcoin. Should we fail to satisfy our obligations with respect to our indebtedness, and should Trinity Capital Inc. foreclose on the miners collaterizing our indebtedness, we could potentially lose up to .33 exahashes of computing power, or 5% of our current computing power. In addition, to the extent the value of the miners securing our borrowings under the Financing Agreement decreases and falls the below the aggregate amount of our obligations under the Financing Agreement, the lender thereunder would be our unsecured creditor in respect of the difference in the value of the collateral and our obligations.

In addition, our indebtedness could:

•

increase our vulnerability to general adverse economic and industry conditions;

•

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, research and development efforts and other general corporate purposes;

•

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•

place us at a competitive disadvantage compared to our competitors that have less debt;

•

result in greater interest rate risk and volatility;

•

limit our ability to borrow additional funds; and

•

make it more difficult for us to satisfy our obligations with respect to our debt, including our obligation to repay our Financing Agreement under certain circumstances, or refinance our indebtedness on favorable terms or at all.

Our lack of insurance protection exposes us and our shareholders to the risk of loss of our bitcoin for which no person is liable.

Our bitcoin, which is held in custody by Coinbase, is not insured. Therefore, a loss may be suffered with respect to our bitcoin which is not covered by insurance and for which no person is liable in damages which could adversely affect our ~~results of~~ operations and, ~~financial condition.~~

~~We may not be able to recover a significant portion of our carrying value of our assets held for sale associated with our energy business operations.~~

We have been evaluating strategic alternatives for the energy business operations, as we made a strategic decision to streamline our business and focus on our bitcoin mining operations. As of June 30, 2022 and September 30, 2021, we classified the assets within the energy business as held for sale on our consolidated balance sheets. We may not be able to realize as much value from the sale of the assets as we expect and we may incur higher than expected, or unforeseen, costs associated with the disposal related activities. Any of the foregoing could have a material adverse effect on our business, financial position and results of operations.

~~We may be unable to effectuate a sale of energy assets~~consequently, an investment in ~~a timely manner or receive consideration that exceeds the carrying value of the assets that are currently held for sale.~~

We have been evaluating strategic alternatives for the energy business operations, as we made a strategic decision to streamline our business and focus on our bitcoin mining operations. As of June 30, 2022 and September 30, 2021, we classified the assets within the energy business as held for sale on our consolidated balance sheets. We cannot provide any assurance that we will be successful in selling our energy business operations for a price in excess of the carrying value of the assets that are currently classified as “held for sale,” if at all. In the event we are unable to sell our energy assets for a price at least equal to the carrying value of the assets, then we will have to record a charge and the amount of the charge could be material.

~~We are subject to various risks associated with our decision to streamline our business and dispose of operations classified as discontinued operations.~~

We have been evaluating strategic alternatives for the energy business operations, as we made a strategic decision to streamline our business and focus on our bitcoin mining operations. Accordingly, our discontinued operations, consisting of energy assets are classified as assets and liabilities held for sale. We now have one segment which is focused on the bitcoin mining operations. As a result of this decision, our revenue and profitability are concentrated in one industry. Downturns, adverse events and other circumstances that may affect this industry and which are largely beyond our control will now uniquely and materially affect us. ~~For instance, if the prices of bitcoins decrease or the~~

~~power~~The value of bitcoin has historically been subject to wide swings. Because we do not currently hedge our investment in bitcoin and do not intend to for the foreseeable future, we are directly exposed to bitcoin’s price volatility and surrounding risks.

The market price of one bitcoin in our principal market ranged from approximately $15,800 to $21,400 during the three months ended December 31, 2022 and ranged from approximately $46,400 to $68,200 during the three months ended December 31, 2021. While bitcoin prices ~~increase significantly,~~are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically been volatile and are impacted by a variety of factors. Such factors include, but are not limited to, the worldwide growth in the adoption and use of bitcoins, the maintenance and development of the software protocol of the bitcoin network, changes in consumer demographics and public tastes, fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions. Furthermore, pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of bitcoin, or our share price, making prices more volatile.

Currently, we do not use a formula or specific methodology to determine whether or when we will sell bitcoin that we hold, or the number of bitcoins we will sell. Rather, decisions to hold or sell bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time. Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us. At this time, we do not anticipate engaging in any hedging activities related to our holding of bitcoin; this would ~~have a more material adverse effect on our results~~expose us to substantial decreases in the price of ~~operations, liquidity and our potential growth than in prior years.~~bitcoin.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

~~The Company is reporting the following information in lieu of reporting on a Current Report on Form 8-K under Item 1.01 – Entry into a Material Definitive Agreement.~~

On August 5, 2022 (the “Agreement Date”), the Company, through its wholly owned subsidiary, CSRE Properties Washington, LLC, a Georgia limited liability company, agreed to purchase certain real property, together with all improvements situated thereon and all rights, easements and appurtenances belonging thereto (collectively, the “Property”), as further described below, pursuant to a purchase and sale agreement (the “Land Purchase Agreement”), from SPRE Commercial Group, Inc. f/k/a Waha, Inc., a Georgia corporation (the “Seller”), for a purchase price of $16,200,000 (the “Land Purchase”). Under the terms of the Land Purchase Agreement, at closing, the Company will pay the Seller the purchase price as follows: (i) $3,161,747 in financing provided by the Seller at an interest rate of 12%, to be repaid in 12 monthly installments of $280,917, (ii) the Company’s assumption of a mortgage with a maximum principal amount of $2,158,253 and an interest rate of 13% and (iii) $10,880,000 of cash consideration. Purchaser delivered an earnest money deposit of $500,000 to Seller on July 25, which is refundable in certain circumstances and will reduce the amount of the cash consideration due at closing. At closing, the Seller will convey fee simple title to the Property to the Company by limited warranty deed.

~~The Property is located in Wilkes County, Georgia and contains approximately 27 acres. The Company intends to utilize the Property to conduct certain of its cryptocurrency mining activities.~~

The Land Purchase is expected to close on or before September 5, 2022, subject to customary inspection and closing conditions, including the closing of the Equipment Purchase described below. The Company has the right to terminate the Land Purchase Agreement for any reason or no reason by delivering written notice to the Seller on or before the date that is 30 days after the Agreement Date.

In connection with the Company’s entry into the Land Purchase Agreement, on August [5], 2022, the Company, through its wholly owned subsidiary, CleanSpark DW, LLC, a Georgia limited liability company, agreed to purchase a mix of S19 and S19 J Pro bitcoin miners equal to approximately 341,985 terahashes, pursuant to an equipment purchase and sale agreement (the “Equipment Purchase Agreement”), from Waha Technologies, Inc., a Georgia corporation (“Equipment Seller”), an affiliate of the Seller, for a purchase price of $8,891,610 (the “Equipment Purchase”), which will be payable in full in cash to the Equipment Seller upon closing.

The closing of the Equipment Purchase shall occur contemporaneously with the closing of the Land Purchase and is subject to the closing of the Land Purchase. If the Land Purchase is not consummated for any reason, either the Company or the Equipment Seller, in its sole discretion, may terminate the Equipment Purchase Agreement without further liability to the other party.

The foregoing descriptions of the Land Purchase Agreement and Equipment Purchase Agreement do not purport to be complete, and are qualified in their entirety by reference to the complete text of such Land Purchase Agreement and Equipment Purchase Agreement, respectively, copies of which are filed as Exhibit 10.3 and Exhibit 10.4, respectively, to this Quarterly Report on Form 10-Q.

Item 6. Exhibits

Incorporated by Reference

Filed/
Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Furnished
Herewith

3.1

First Amended and Restated Articles of Incorporation of CleanSpark, Inc., dated September 17, 2021

8-K

001-39187

3.1

9/17/2021

3.2

First Amended and Restated Bylaws of CleanSpark, Inc., dated September 17, 2021

8-K

001-39187

3.2

9/17/2021

4.1

Form of Senior Secured Redeemable Convertible Debenture, dated December 31, 2018 issued to the Investor

8-K

000-53498

4.1

12/31/2018

4.2

Form of Common Stock Purchase Warrant, dated December 31, 2018, issued to the Investor

8-K

000-53498

4.2

12/31/2018

4.3

Form of Senior Secured Redeemable Convertible Promissory Note, dated April 17, 2019, issued to the Investor

8-K

000-53498

4.1

4/18/2019

4.4

Form of Common Stock Purchase Warrant, dated December 31, 2018, issued to the Investor

8-K

000-53498

4,2

4/18/2019

10.1

Master Equipment Financing Agreement by and between CleanSpark, Inc. and Trinity Capital Inc. dated as of April 22, 2022

8-K

001-39187

10.1

4/26/2022

10.2

Form of Equipment Financing Schedule by and between CleanSpark, Inc. and Trinity Capital Inc.

8-K

001-39187

10.2

4/26/2022

10.3

Purchase and Sale Agreement by and between CSRE Properties Washington, LLC, SPRE Commercial Group, Inc. F/K/A, WAHA, Inc. and WAHA Technologies, Inc., dated as of August 5, 2022

*
10.4

Equipment Purchase and Sale Agreement by and between CleanSpark DW, LLC and WAHA Technologies, Inc., dated as of August 5, 2022

*
31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)

*
31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

*
32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

**
32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

**

Incorporated by Reference

Filed/

Exhibit

Number

Exhibit Description

Form

File No.

Exhibit

Filing

Date

Furnished

Herewith

3.1

First Amended and Restated Articles of Incorporation of CleanSpark, Inc., dated September 17, 2021

8-K

001-39187

3.1

9/17/2021

3.2

First Amended and Restated Bylaws of CleanSpark, Inc., dated September 17, 2021

8-K

001-39187

3.2

9/17/2021

10.1

First Amendment to Purchase and Sale Agreement, dated as of October 3, 2022, by and among CSRE Properties Sandersville, LLC, Luna Squares LLC, Mawson Infrastructure Group, Inc. and the Company.

8-K

001-39187

10.3

10/11/2022

10.2

Secured Promissory Note of CSRE Properties Sandersville, LLC dated October 5, 2022.

8-K

001-39187

10.4

10/11/2022

10.3

Amendment No. 1 to the At the Market Offering Agreement, dated December 14, 2022, between CleanSpark, Inc. and H.C. Wainwright & Co., LLC

8-K

001-39187

10.1

12/14/2022

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350


101 INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101 SCH	Inline XBRL Taxonomy Extension Schema Document
101 CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101 DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101 LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101 PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*	Filed herewith.
**	Furnished herewith.

2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: ~~August~~February 9, ~~2022~~2023	By: /s/ Zachary K. Bradford Zachary K. Bradford Title: Chief Executive Officer (Principal Executive Officer)



Date: ~~August~~February 9, ~~2022~~2023	By: /s/ Gary A. Vecchiarelli Gary A. Vecchiarelli Title: Chief Financial Officer (Principal Financial and Accounting Officer)


☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30,~~December 31, 2022

☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number: 001-39187


Nevada	87-0449945
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CLSK	The Nasdaq Stock Market LLC


☒ ☐ Large accelerated filer	☐ Accelerated filer
☐ ☒ Non-accelerated Filer	☐☒ Smaller reporting company
	☐ Emerging growth company


Consolidated Balance Sheets as of ~~June 30,~~December 31, 2022 (unaudited) and September 30, ~~2021;~~2022;	F-1
Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss) for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021 (unaudited);	F-3
Consolidated Statements of Stockholders’ Equity for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2022 and 2021 (unaudited);	~~F-5~~F-6
Consolidated Statements of Cash Flow for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and 2021 (unaudited);	F-8
Notes to Consolidated Financial Statements (unaudited).	F-10


		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	5
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 3:	~~Quantitative and Qualitative Disclosures About Market Risk~~	12
~~Item~~ 4:	Controls and Procedures	1315
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	1516
Item 1A:	Risk Factors	1516
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3:	Defaults Upon Senior Securities	18
Item 4:	Mine Safety Disclosures	18
Item 5:	Other Information	18
Item 6:	Exhibits	19


	June 30, 2022 (Unaudited)		September 30, 2021
ASSETS
Current assets
Cash and cash equivalents, including restricted cash	$	2,661,682	$	18,040,327
Accounts receivable, net		102,781		307,067
Inventory		0		79,811
Prepaid expense and other current assets		3,734,586		2,137,803
Digital currency		10,538,120		23,603,210
Derivative investment asset		2,761,780		4,905,656
Investment in equity security		250,000		260,772
Investment in debt security, AFS, at fair value		569,996		494,608
Current assets held for sale		8,829,728		7,897,067
Total current assets	$	29,448,673	$	57,726,321

Property and equipment, net	$	322,185,923	$	137,477,735
Operating lease right of use asset		1,285,146		1,488,240
Intangible assets, net		6,807,130		9,913,441
Deposits on mining equipment		31,856,635		87,959,910
Other long-term asset		6,587,274		875,536
Goodwill		12,048,419		12,048,419
Long-term assets held for sale		839,624		9,983,519
Total assets	$	411,058,824	$	317,473,121

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	12,995,578	$	6,982,517
Operating lease liability		323,951		256,195
Finance lease liability		274,222		403,410
Acquisition liability		0		300,000
Contingent consideration		0		820,802
Loans payable		5,359,904		0
Dividends payable		20,828		0
Current liabilities held for sale		1,011,811		1,300,098
Total current liabilities	$	19,986,294	$	10,063,022
Long-term liabilities
Operating lease liability, net of current portion		977,517		1,235,325
Finance lease liability, net of current portion		249,706		422,679
Loans payable, net of current portion		12,978,512		0
Long-term liabilities held for sale		0		35,629
Total liabilities	$	34,192,029	$	11,756,655

Stockholders' equity
Common stock; $0.001 par value; 100,000,000 shares authorized; 41,300,241 and 37,395,945 shares issued and outstanding as of June 30, 2022 and September 30, 2021, respectively		41,299		37,394
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding as of June 30, 2022 and September 30, 2021, respectively		1,750		1,750
Additional paid-in capital		530,506,510		444,074,832


	December 31, 2022		September 30, 2022
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2,061	$	20,463
Accounts receivable, net		30		27
Inventory		392		216
Prepaid expense and other current assets		6,069		7,931
Bitcoin		3,863		11,147
Derivative investment asset		1,685		2,956
Investment in debt security, AFS, at fair value		639		610
Current assets held for sale		6,447		7,426
Total current assets	$	21,186	$	50,776

Property and equipment, net	$	434,777	$	376,781
Operating lease right of use asset		5,482		551
Intangible assets, net		6,213		6,485
Deposits on mining equipment		5,814		12,497
Other long-term asset		4,640		3,990
Goodwill		8,043		—
Long-term assets held for sale		634		1,545
Total assets	$	486,789	$	452,625

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	27,927	$	24,662
Operating lease liability		260		113
Finance lease liability		218		260
Contingent consideration		4,840		—
Current portion of long-term loans payable		7,504		7,786
Dividends payable		21		21
Current liabilities held for sale		830		1,199
Total current liabilities	$	41,600	$	34,041
Long-term liabilities
Operating lease liability, net of current portion		5,457		447
Finance lease liability, net of current portion		129		180
Loans payable, net of current portion		12,099		13,433
Long-term liabilities held for sale		469		512
Total liabilities	$	59,754	$	48,613


Accumulated other comprehensive income (loss)		69,996			(5,392	)
Accumulated deficit		(153,752,760	)		(138,392,118	)
Total stockholders' equity		376,866,795			305,716,466

Total liabilities and stockholders' equity	$	411,058,824		$	317,473,121


Total comprehensive loss attributable to common shareholders	$	(29,311,427	)	$	(16,677,127	)	$	(15,285,254	)	$	(16,622,124	)

Income (loss) from continuing operations per common share - basic	$	(0.39	)	$	(0.41	)	$	0.02		$	(0.35	)

Weighted average common shares outstanding - basic		41,277,090			34,014,221			41,010,826			27,355,111

Income (loss) from continuing operations per common share - diluted	$	(0.39	)		(0.41	)	$	0.02			(0.35	)

Weighted average common shares outstanding - diluted		41,277,090			34,014,221			41,092,028			27,355,111

Loss on discontinued operations per common share - basic	$	(0.32	)	$	(0.08	)	$	(0.39	)	$	(0.25	)

Weighted average common shares outstanding - basic		41,277,090			34,014,221			41,010,826			27,355,111

Loss on discontinued operations per common share - diluted	$	(0.32	)	$	(0.08	)	$	(0.39	)	$	(0.25	)

Weighted average common shares outstanding - diluted		41,277,090			34,014,221			41,092,028			27,355,111


	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance, September 30, 2021		1,750,000	$	1,750		37,395,945		$	37,394		$	444,074,832		$	(5,392	)	$	(138,392,118	)	$	305,716,466
Options and restricted stock units issued for services		—		-		-			-			5,749,107	��		-			-			5,749,107
Shares issued for settlement of contingent consideration related to business acquisition		—		-		8,404			8			150,003			-			-			150,011
Exercise of options and warrants		—		-		52,061			52			281,564			-			-			281,616
Shares issued under equity offering, net of offering costs		—		-		4,017,652			4,021			67,984,972			-			-			67,988,993
Preferred stock dividends accrued		—		-		-			-			-			-			(314,611	)		(314,611	)
Net income		—		-		-			-			-			-			14,485,755			14,485,755
Other comprehensive income		—		-		-			-			-			18,113			-			18,113
Balance, December 31, 2021		1,750,000	$	1,750		41,474,062		$	41,475		$	518,240,478		$	12,721		$	(124,220,974	)	$	394,075,450
Options, restricted stock units and shares issued for services		—		-		1,874			2			6,553,982			-			-			6,553,984
Shares returned for settlement of contingent consideration and holdbacks related to business acquisition		—		-		(232,518	)		(233	)		233			-			-			-
Exercise of options and warrants		—		-		47,169			47			451,507			-			-			451,554
Preferred stock dividends accrued		—		-		-			-			-			-			(20,828	)		(20,828	)
Net loss		—		-		-			-			-			-			(170,735	)		(170,735	)
Other comprehensive income		—		-		-			-			-			28,479			-			28,479


Balance, March 31, 2022	1,750,000	$	1,750	41,290,587	$	41,291	$	525,246,200	$	41,200	$	(124,412,537	)	$	400,917,904
Options, restricted stock units and shares issued for services	—		-	3,364		3		5,212,776		-		-			5,212,779
Exercise of options	—		-	6,290		5		47,534		-		-			47,539
Net loss	—		-	-		-		-		-		(29,340,223	)		(29,340,223	)
Other comprehensive income	—		-	-		-		-		28,796		-			28,796
Balance, June 30, 2022	1,750,000	$	1,750	41,300,241	$	41,299	$	530,506,510	$	69,996	$	(153,752,760	)	$	376,866,795


Preferred stock dividends accrued	—		-	-			-			-			-		(177,505	)		(177,505	)
Net income	—		-	-			-			-			-		7,400,040			7,400,040
Balance, March 31, 2021	1,750,000	$	1,750	33,874,151		$	33,874		$	400,032,436		$	0	$	(116,347,601	)	$	283,720,459
Shares issued for services	—		-	112,486			112			2,712,813			-		-			2,712,925
Options and warrants issued for services	—		-	-			-			686,447			-		-			686,447
Exercise of options and warrants	—		-	48,310			48			384,955			-		-			385,003
Shares issued under underwritten offering, net of offering costs	—		-	731,190			730			11,859,836			-		-			11,860,566
Shares returned in relation to business acquisition	—		-	(68,194	)		(68	)		(892,591	)		-		-			(892,659	)
Net loss	—		-	-			-			-			-		(16,677,127	)		(16,677,127	)
Balance, June 30, 2021	1,750,000	$	1,750	34,697,943		$	34,696		$	414,783,896		$	0	$	(133,024,728	)	$	281,795,614


	Preferred Stock				Common Stock				Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance, September 30, 2022		1,750,000	$	2		55,661,337	$	56	$	599,898	$	110	$	(196,054	)	$	404,012
Options and restricted stock units issued for services		—		—		11,210		—		5,878		—		—			5,878
Shares issued for business acquisition		—		—		1,590,175		2		4,801		—		—			4,803
Shares issued under equity offering, net of offering costs		—		—		14,481,208		14		41,330		—		—			41,344
Net loss		—		—		—		—						(29,031	)		(29,031	)
Other comprehensive income		—		—		—		—		—		29		—			29
Balance, December 31, 2022		1,750,000	$	2		71,743,930	$	72	$	651,907	$	139	$	(225,085	)	$	427,035


	Nine Months Ended
	June 30, 2022			June 30, 2021
Cash Flows from Operating Activities
Net loss	$	(15,025,203	)	$	(16,444,619	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Unrealized (gain) loss on equity security		1,847			(98,914	)
Realized gain on sale of equity security		(665	)		(105,908	)
Impairment of digital currency		11,452,405			3,720,481
Realized gain on sale of digital currency		(2,026,427	)		(672,065	)
Digital currency issued for services		450,948			162,038
Impairment of goodwill		7,000,779			—
Impairment of fixed assets		31,833			—
Impairment of intangibles		1,402,016			—
Impairment related to working capital		2,144,284			—
Unrealized (gain) loss on derivative asset		2,143,876			(5,319,361	)
Gain on fair value of contingent consideration		(345,791	)		0
Non-cash lease expense		203,094			271,715
Stock based compensation		17,515,870			8,599,029
Depreciation and amortization		34,942,187			6,883,020
Provision for bad debts		218,600			234,112
Amortization of debt discount		14,612			—
PPP loan forgiveness		—			(531,169	)
Gain on write-off and disposal of assets		(642,691	)		—
Income from in-kind receipts of miners		(308,038	)		—
Changes in operating assets and liabilities
Mining of digital currency		(104,882,043	)		(16,098,643	)
Proceeds from sale of digital currencies		108,070,207			2,499,757
Decrease in operating lease liabilities		(190,052	)		(272,123	)
Decrease in contract assets, net		—			4,103
Increase (decrease) in contract liabilities, net		(162,457	)		532,675
Increase in accounts payable and accrued liabilities		2,997,027			3,699,298
(Increase) in prepaid expenses and other current assets		(11,545,789	)		(2,914,993	)
(Increase) in accounts receivables		(1,812,892	)		(1,298,308	)
Decrease (Increase) in Inventory		831,752			(3,978,257	)
Net cash provided by (used in) operating activities	$	52,479,289		$	(21,128,132	)
Cash Flows from investing
Payments on miner deposits	$	(124,272,481	)	$	(125,855,501	)
Purchase of fixed assets		(32,104,835	)		(60,536,521	)
Settlement of holdbacks related to contingent consideration		(625,000	)		—
Investment in infrastructure development		—			(6,431,664	)
Proceeds from sale of miners		3,497,654			—
Proceeds from the sale of equity securities		9,590			182,044
Acquisition of Solar Watt Solutions, net of cash received		—			(1,000,337	)
Acquisition of ATL Data Center, net of cash received		—			45,783
Net cash used in investing activities	$	(153,495,072	)	$	(193,596,196	)
Cash Flows from Financing Activities
Payments on promissory notes	$	—		$	(5,865,476	)
Payments on preferred dividends		(314,611	)		—
Payments on finance leases		(448,291	)		(181,475	)
Payments on equipment backed loan		(974,572	)		—


		Useful ~~Life~~life (years)
Land Improvements		15
Building		30
~~Land~~Leasehold improvements		15
~~Machinery and equipment~~	Shorter of lease term or	115-10
~~Office equipment~~		3-7 years
Miners		3-5
Mining ~~equipment~~Equipment		3-15
~~Leasehold improvements~~		~~Shorter of estimated lease term or~~ 15 ~~years~~
Infrastructure asset		Shorter of ~~estimated~~ lease term or 5 years
~~Furniture~~Machinery and ~~fixtures~~equipment		1-510
Furniture and fixtures		3-7


	Three Months Ended
	December 31, 2022			December 31, 2021
Cash Flows from Operating Activities
Net (loss) income	$	(29,031	)	$	14,486
Less: (Income) loss from discontinued Operations		(1,457	)		1,158
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Unrealized loss on equity security		—			2
Realized gain on sale of equity security		—			(1	)
Impairment of bitcoin		83			6,222
Realized loss (gain) on sale of bitcoin		517			(9,995	)
Bitcoin issued for services		134			182
Unrealized (gain) loss on derivative asset		1,271			(299	)
Gain on fair value of contingent consideration		(485	)		(56	)
Non-cash lease expense		79			28
Stock based compensation		5,878			5,749
Depreciation and amortization		19,329			7,427
Provision for bad debts		70			—
Amortization of debt discount		1			—
Loss on write-off and disposal of assets		—			278
Changes in operating assets and liabilities
Mining of bitcoin		(27,746	)		(36,975	)
Proceeds from sale of bitcoin		34,067			33,965
Change in contract liabilities		—			90
Increase (decrease) in operating lease liabilities		56			(25	)
Increase (decrease) in accounts payable and accrued liabilities		3,265			(5,549	)
Decrease (increase) in prepaid expenses and other current assets		1,862			(3,310	)
(Increase) in accounts receivables		(73	)		(548	)
(Increase) decrease in Inventory		(176	)		12
Long -term deposits paid		(2,941	)		—
Net cash provided by operating activities from Continuing Operations	$	4,703		$	12,841
Net cash provided by operating activities of Discontinued Operations		412			155
Net cash provided by operating activities	$	5,115		$	12,996

Cash Flows from Investing Activities
Payments on miners (including deposits)	$	(31,540	)	$	(70,634	)
Purchase of fixed assets		(4,953	)		(21,430	)
Investment in infrastructure development		—			(1,949	)
Proceeds from the sale of equity securities		—			10
Acquisition of Mawson		(22,518	)		—
Net cash used in investing activities - Continuing Operations	$	(59,011	)	$	(94,003	)
Net cash provided by investing activities - Discontinued Operations		2,523			—
Net cash used in investing activities	$	(56,488	)	$	(94,003	)


Proceeds from equipment backed loan		18,704,416			—
Proceeds from exercise of options and warrants		681,203			3,731,563
Proceeds from equity offerings, net		67,988,993			236,123,384
Net cash provided by financing activities	$	85,637,138		$	233,807,996

Net increase (decrease) in cash and cash equivalents and restricted cash	$	(15,378,645	)	$	19,083,668

Cash and cash equivalents and restricted cash, beginning of period	$	18,040,327		$	3,126,202

Cash and cash equivalents and restricted cash, end of period	$	2,661,682		$	22,209,870
Supplemental disclosure of cash flow information
Cash paid for interest	$	353,098		$	51,463
Cash paid for tax	$	0		$	0
Non-cash investing and financing transactions
Day one recognition of right of use asset and liability	$	—		$	554,979
Right of use asset and liability written off due to lease termination	$	—		$	603,700
Shares and options issued for business acquisition	$	—		$	33,537,396
Cashless exercise of options and warrants	$	17		$	74
Receivables from exercise of options	$	99,506		$	—
Final payment withheld from equipment backed loan	$	643,960		$	—
Shares issued for settlement of seller agreements related to acquisition	$	150,011		$	—
Shares returned as part of settlement of seller agreements related to acquisition	$	233		$	—
Preferred shares dividends accrued	$	335,439		$	177,505
Unrealized gain on investment in available-for-sale debt security	$	75,388		$	—


	June 30, 2022		September 30, 2021
Cash and cash equivalents, excluding restricted cash	$	2,661,682	$	14,571,198
Restricted cash - construction escrow account		—		3,469,129
Cash and cash equivalents, including restricted cash	$	2,661,682	$	18,040,327


	June 30, 2022			September 30, 2021
Accounts Receivable, gross	$	320,133		$	307,067
Other receivables		1,248			—
Provision for doubtful allowances		(218,600	)		—
Total Accounts Receivable, net	$	102,781		$	307,067


	For the Three Months Ended June 30,						For the Nine Months Ended June 30,						For the Three Months Ended December 31,
	2022			2021			2022			2021
($ in thousands, except share and per share)													2022			2021
Continuing Operations
Numerator
Income (loss) from continuing operations	$	(16,236,076	)	$	(14,074,995	)	$	1,064,790		$	(9,477,358	)
(Loss) income from continuing operations													$	(30,488	)	$	15,644
Preferred stock dividends		0			0			335,439			177,505			—			315
Income (loss) from continuing operations attributable to common shareholders		(16,236,076	)		(14,074,995	)		729,351			(9,654,863	)
(Loss) income from continuing operations attributable to common shareholders													$	(30,488	)	$	15,330

Denominator
Weighted- average common shares outstanding, basic		41,277,090			34,014,221			41,010,826			27,355,111			66,395,174			40,279,938
Dilutive impact of stock options and other share-based awards		—			—			81,202			—			—			205,823
Weighted- average common shares outstanding, diluted		41,277,090			34,014,221			41,092,028			27,355,111			66,395,174			40,485,761
Income (loss) from continuing operations per common share attributable to common shareholders
(Loss) income from continuing operations per common share attributable to common shareholders
Basic	$	(0.39	)	$	(0.41	)	$	0.02		$	(0.35	)	$	(0.46	)	$	0.38
Diluted	$	(0.39	)	$	(0.41	)	$	0.02		$	(0.35	)	$	(0.46	)	$	0.38

Discontinued Operations
Numerator
Loss on discontinued operations		(13,104,147	)		(2,602,132	)		(16,089,993	)		(6,967,261	)
Income (loss) on discontinued operations													$	1,457		$	(1,158	)
Denominator
Weighted- average common shares outstanding, basic		41,277,090			34,014,221			41,010,826			27,355,111			66,395,174			40,279,938
Dilutive impact of stock options and other share-based awards		—			—			81,202			—			1,005,160			—
Weighted- average common shares outstanding, diluted		41,277,090			34,014,221			41,092,028			27,355,111			67,400,334			40,279,938
Loss on discontinued operations per common share attributable to common shareholders
Income (loss) on discontinued operations per common share attributable to common shareholders
Basic	$	(0.32	)	$	(0.08	)	$	(0.39	)	$	(0.25	)	$	0.02		$	(0.03	)
Diluted	$	(0.32	)	$	(0.08	)	$	(0.39	)	$	(0.25	)	$	0.02		$	(0.03	)


	Amount
Balance as on September 30, 2021	$	23,603,210
Addition of digital currencies		104,882,043
Sale of digital currencies		(108,070,207	)
Digital currencies issued for services		(450,948	)
Realized gain on sale of digital currencies, including services		2,026,427
Impairment loss		(11,452,405	)
Balance as on June 30, 2022	$	10,538,120


($ in thousands)	Amount
Balance as on September 30, 2022	$	11,147
Addition of bitcoin		27,746
Sale of bitcoin		(34,067	)
Bitcoin issued for services		(134	)
Bitcoin issued for software		(229	)
Realized loss on sale of bitcoin		(517	)
Impairment loss		(83	)
Balance as on December 31, 2022	$	3,863


June 30, 2022
	Amount		Level 1		Level 2		Level 3
December 31, 2022
($ in thousands)									Amount		Level 1		Level 2		Level 3
Derivative asset	$	2,761,780	$	-	$	-	$	2,761,780	$	1,685	$	—	$	—	$	1,685
Investment in debt security		569,996		-		-		569,996		639		—		—		639
Contingent consideration										4,840		4,840		—		—
Total	$	3,331,776	$	-	$	-	$	3,331,776	$	7,164	$	4,840	$	—	$	2,324

September 30, 2021
	Amount		Level 1		Level 2		Level 3
Derivative asset	$	4,905,656	$	-	$	-	$	4,905,656
Investment in equity security		10,772		10,772		-		0
Investment in debt security		494,608		-		-		494,608
Contingent cash consideration		0		-		-		0
Total	$	5,411,036	$	10,772	$	-	$	5,400,264


Consideration:	Fair Value
Cash	$	1,350,000
Contingent consideration		155,000
310,018 shares of common stock as contingent equity consideration	$	533,002
167,685 shares of common stock		4,649,905
Total Consideration	$	6,687,907


	Preliminary Allocation at Acquisition Date			Adjustments to Fair Value			Final Allocation at Acquisition Date
Customer List	$	5,122,733		$	(4,932,733	)	$	190,000
Goodwill		1,642,409			5,178,126			6,820,535
Other Assets and Liabilities assumed, net		(77,235	)		(245,393	)		(322,628	)
Total	$	6,687,907		$	0		$	6,687,907


Purchase Price Allocation	Preliminary Allocation at Acquisition Date			Adjustments to Fair Value			Final Allocation at Acquisition Date
Strategic Contract	$	7,457,970		$	2,342,000		$	9,799,970
Goodwill		14,205,245			(1,264,167	)		12,941,078
Other Assets and Liabilities assumed, net		(479,864	)		(1,077,833	)		(1,557,697	)
Total	$	21,183,351		$	0		$	21,183,351


	For the nine months ended
	June 30, 2021
Net sales from continuing operations	$	18,638,887
Income from continuing operations	$	(9,266,397	)
Income from continuing operations per common share - basic	$	(0.34	)
Weighted average common shares outstanding – basic		27,355,111
Income from continuing operations per common share - diluted	$	(0.34	)
Weighted average common shares outstanding – diluted		27,355,111
Net sales from discontinued operations	$	6,244,406
Loss on discontinued operations	$	(7,784,411	)
Loss on discontinued operations per common share - basic	$	(0.28	)
Weighted average common shares outstanding – basic		27,355,111
Loss on discontinued operations per common share - diluted	$	(0.28	)
Weighted average common shares outstanding – diluted		27,355,111


($ in thousands)	ILAL Debt Securities		ILAL Derivative Asset
Balance as of September 30, 2022	$	610	$	2,956
Unrealized loss on derivative asset		—		(1,271	)
Unrealized gain on fair value recognized in Other comprehensive income		29		—
Balance as of December 31, 2022	$	639	$	1,685


	ILAL Debt Securities		ILAL Derivative Asset			ILAL Equity Securities			Law Clerk Equity Securities
Balance as of September 30, 2021	$	494,608	$	4,905,656		$	10,772		$	250,000
Shares sold during the year		—		—			(9,590	)		—
Realized gain on fair value recognized in other income (expense)		—		—			665			—
Unrealized loss recognized in other income (expense)		—		(2,143,876	)		(1,847	)		—
Unrealized gain on fair value recognized in Other comprehensive income		75,388		—			—			—
Balance as of June 30, 2022	$	569,996	$	2,761,780		$	—		$	250,000


June 30, 2022
	Intangible assets		Accumulated amortization		Total		December 31, 2022							September 30, 2022
Patents	$	74,112	$	31,226	$	42,886
($ in thousands)							Intangible assets		Accumulated amortization			Net intangible assets		Intangible assets		Accumulated amortization			Net intangible assets
Software							$	440	$	(11	)	$	429	$	210	$	—		$	210
Websites		23,115		10,198		12,917		23		(12	)		11		23		(11	)		12
Strategic Contract		9,799,970		3,048,643		6,751,327		9,800		(4,027	)		5,773		9,800		(3,537	)		6,263
Total	$	9,897,197	$	3,090,067	$	6,807,130	$	10,263	$	(4,050	)	$	6,213	$	10,033	$	(3,548	)	$	6,485


Year	June 30, 2022
2022 (three months remaining)	$	492,214
2023		1,968,857
Fiscal Year
($ in thousands)			December 31, 2022
Remainder of FY 2023			$	1,550
2024		1,968,857		2,064
2025		1,965,523		2,060
2026		386,759		482
2027				46
Thereafter		24,920		11
	$	6,807,130
Total			$	6,213


	June 30, 2022			September 30, 2021
Mining equipment	$	12,161,401		$	2,817,074
Miners		313,410,536			120,330,769
Land Improvements		1,529,937			—
Office Equipment		206,101			—
Land and building		12,744,992			11,048,299
Machinery and equipment		231,609			63,978
Leasehold improvements		144,647			63,447
Furniture and fixtures		118,358			39,313
Infrastructure		12,338,191			81,868
Construction in progress		6,572,849			10,498,311
Less: accumulated depreciation		(37,272,698	)		(7,465,324	)
Property and equipment, net	$	322,185,923		$	137,477,735


Fiscal Year	Operating Leases			Finance Leases
2022 (three months remaining)	$	80,235		$	32,806
2023		324,949			321,887
($ in thousands) Fiscal Year							Operating Leases			Finance Leases
Remainder of Fiscal 2023							$	405		$	185
2024		333,234			179,572			452			146
2025		341,767			21,728			456			22
2026		299,039			0			464			1
2027								376			—
Thereafter		50,659			0			7,295			—
Gross lease liabilities		1,429,883			555,993			9,448			354
Less: imputed interest		(128,415	)		(32,065	)		(3,731	)		(7	)
Present value of lease liabilities	$	1,301,468		$	523,928		$	5,717		$	347
Less: Current portion of lease liabilities		(323,951	)		(274,222	)		(260	)		(218	)
Total lease liabilities, net of current portion	$	977,517		$	249,706		$	5,457		$	129


	Number of Warrant Shares			Weighted Average Exercise Price ($)		Number of Warrant Shares		Weighted Average Exercise Price ($)
Balance, September 30, 2021		615,704		$	30.72
Balance, September 30, 2022							202,220	$	13.03
Warrants granted		0			0		—		—
Warrants expired		(413,334	)	39.38			—		—
Warrants canceled		0			0		—		—
Warrants exercised		0			0		—		—
Balance, June 30, 2022		202,370		$	13.03
Balance, December 31, 2022							202,220	$	13.03


	Number of Option Shares			Weighted Average Exercise Price ($)		Number of Option Shares			Weighted Average Exercise Price ($)
Balance, September 30, 2021		1,547,029			18.35
Balance, September 30, 2022							1,418,938			19.11
Options granted		197,750			15.27		47,000			3.34
Options expired		0			0		(25,000	)		5.60
Options canceled/forfeited		(238,418	)		15.40		(55,886	)		14.02
Options exercised		(105,520	)		7.43		—
Balance, June 30, 2022		1,400,841		19.28
Balance, December 31, 2022							1,385,052		19.02