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Cleanspark: New Bitcoin Mining Revenue Could Send Shares Higher, Says Analyst

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TipRanks
·2 min read
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Bitcoin is once again front-page news. Firms have been stocking up on the daddy of crypto as the narrative on bitcoin has matured; it is steadily gaining acceptance in the financial world and edging closer to mainstream adoption.

CleanSpark (CLSK) is the latest company to jump on the bandwagon. Last week, the microgrid software player announced it is buying bitcoin miner ATL Data Centers.

The purchase will cost CleanSpark $19.4 million in an all stock deal, and will mean CleanSpark will get its hands on ATL’s 3,471 mining rigs.

Bitcoin has been on a tear in 2020, up by 167% and is currently hovering not far beneath its all-time high. However, mining bitcoin is infamously energy intensive. Using its specialty software, CleanSpark says it can design and install microgrids to mitigate this factor.

Following the announcement, H.C. Wainwright analyst Amit Dayal increased his projections for CleanSpark. The analyst now expects FY2021 and FY2030 revenues to hit $28.7 million and $266.1 million, up from the previous estimates of $20.3 million and $214.0 million, respectively. Additionally, Dayal’s EBITDA forecasts for the same periods get an upwards tweak, rising from a loss of $2.4 million and gain of $110.4 million, to gains of $1.6 million and $125.1 million.

Evidently, the analyst thinks the new addition amounts to a good move. But while bitcoin is notorious for its energy consumption, it is just as infamous for its wild price swings. Accordingly, Dayal prepares investors for a bumpy ride.

“We believe the company has capacity to scale both the data center services and bitcoin operations supported by the recent $40M financing,” the 5-star analyst said. “Management has suggested that additional acquisitions to strengthen the company's software portfolio may be undertaken, but we are not including those potential developments in our model. Investors should be aware that the company's entry into the bitcoin mining industry could subject the stock to additional volatility driven by headlines associated with the crypto-currency markets, and daily fluctuations in the price of bitcoin.”

All in all, Dayal rates CLSK shares a Buy along with a $24 price target. This figure suggests room for ~48% upside in the next 12 months. (To watch Dayal’s track record, click here)

Cleanspark appears to be flying under Wall Street’s radar right now, and no other analysts have posted recent CLSK reviews. (See CLSK stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.