The surge in shares of Bitcoin mining companies in recent months amid the backdrop of soaring Bitcoin prices begs the question – Are these stocks overvalued?
Bitcoin, a giant with a market cap surpassing $1 trillion, has seen its prices skyrocket by over 300% in the last 15 months, propelling valuations of crypto mining companies to dizzying heights.
One such standout in this regard is Cleanspark (CLSK), with its shares blazing a trail by soaring 103% year-to-date and an astonishing 792% over the last 12 months. Let’s delve deeper to discern if Cleanspark’s valuation is justified or if it teeters on overvaluation.
Unpacking Cleanspark’s Fiscal Q1 Performance
At a market cap of $4.5 billion, Cleanspark, a U.S.-based Bitcoin miner, displayed a robust performance in fiscal Q1 of 2024, reporting a revenue surge of 165% year over year to $73.8 million. Its net income skyrocketed to $25.9 million from a loss of $29 million in the prior year, accompanied by an impressive adjusted EBITDA of $69.1 million.
The uptrend in BTC prices enabled Cleanspark to surpass revenue and earnings consensus estimates by a substantial margin in the December quarter, bridging nearly half the gap to its total 2023 revenue within a single quarter.
Striving for Hashrate Enhancement
In a bid to enhance its mining capabilities, Cleanspark aspires to achieve a mining capacity of 20 exahash per second in the first half of the year. A higher hashrate translates to increased computational power, enabling quicker problem-solving and augmented rewards during Bitcoin mining.
While a boosted hashrate can bolster miners’ profit margins by upping block mining success rates, it also intensifies energy consumption, posing a profitability challenge.
Cleanspark’s recent acquisition of three Bitcoin mining data centers propelled its operating rate to over 15 exahashes per second (EH/s), marking a 60% surge in 2024 and outpacing global hashrate growth.
Having mined 650 BTC in February, Cleanspark currently sits on a digital asset treasury worth $260 million, focusing on augmenting hashrate and operational efficiencies in anticipation of the halving event and the positive “supply shock” impact historically associated with surging Bitcoin prices.
Analyst Projections and Price Targets for CLSK Stock
Analysts foresee Cleanspark concluding fiscal 2024 with earnings of $0.75 per share, a stark improvement from its $1.33 per share loss in 2023, with expected earnings expanding to $1.37 per share in 2025.
Revenue forecasts paint a promising picture, with projections of revenue crossing $432 million in 2024 and soaring to $826 million in 2025. Out of the six analysts covering CLSK stock, five advocate a “strong buy,” while one suggests “hold.” The mean target price stands at $18.87, slightly below current levels, though an optimistic high target price of $27 hints at a potential 19% upside from present valuations.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
