CleanSpark, Inc. (CLSK) claims to provide software as a service, physical controllers, and consultation services to renewable energy infrastructure. This allows the company to have a diverse range of tools and abilities to help a client create a suitable microgrid platform. However, the reality is CLSK’s microgrid business has not gained any traction, and we doubt it ever will.
CLSK was a former OTC traded stock and got uplisted to the Nasdaq on 1/24/20. CLSK has been trading between $2-$3 from early March until early July, which is a fraction of its current price, which closed at $10.40 on 10/7/20. We believe the reason for the rapid rise in share price is due to news flow with buzz words that attract retail investors, primarily regarding microgrids and electric vehicle batteries and charging stations, sectors that have become hot this quarter.
However, its business hasn’t generated significant revenues and its losses have remained substantial. Its technology doesn’t appear to have any advantage over its competition which are established companies like Siemens and GE. After a year of cash burn, we believe that the stock will fade back to $2-$3 where it was trading a few months ago.
What we believe will accelerate CLSK’s downfall, is the expected selling of shares by its largest shareholder, Discover Growth Fund (“Discover”). What we believe most CLSK shareholders don’t realize, is CLSK is in a vicious court battle with Discover which is demanding additional shares at a $1.50 price. The worst case scenario for CLSK, is if it owes Discover hundreds of millions of shares, as stated in CLSK’s appeal filed on 9/18/20. Discovery has a history of selling its entire position of its many previous investments.
CleanSpark Small Revenues And Consistent Losses
CLSK was acquired in 2016 by Statean Energy, which was a clean