Q3 2023 CleanSpark Inc Earnings Call

Participants

Gary A. Vecchiarelli; CFO; CleanSpark, Inc.

Isaac Holyoak; Chief Communications Officer; CleanSpark, Inc.

Zachary K. Bradford; CEO, President & Director; CleanSpark, Inc.

Brian H. Dobson; Senior Research Analyst; Chardan Capital Markets, LLC, Research Division

Joshua Michael Siegler; Research Analyst; Cantor Fitzgerald & Co., Research Division

Michael Anthony Colonnese; MD of Equity Research & Senior Technology Analyst; H.C. Wainwright & Co, LLC, Research Division

Tyler DiMatteo; Analyst; BTIG, LLC, Research Division

Presentation

Operator

Ladies and gentlemen, good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to CleanSpark's Fiscal Third Quarter Financial Results Conference Call. (Operator Instructions) And at this time, I would like to turn the floor over to Isaac Holyoak, Chief Communications Officer. You may begin.

Isaac Holyoak

Thanks, Abby, and thank you for joining us today for our fiscal third quarter financial results call, covering the period April 1, 2023 through June 30, 2023.
Our press release was issued about 30 minutes ago and is available on our website at www.cleanspark.com/investors. Today's call is also being webcast, and a replay and transcript will be available on our website.
I'm here with Zach Bradford, our Chief Executive Officer; and Gary Vecchiarelli, our Chief Financial Officer. Keep in mind that some of the statements we make today are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and on our website, those elements may change as the world changes. We will also discuss certain non-GAAP financial measures concerning our performance during today's call. You can find the reconciliation of GAAP financial measures in our press release which is available on our website.
And with that, it is my pleasure to turn the call over to Zach.

Zachary K. Bradford

Thank you, Isaac. Good afternoon, and thank you for joining us for our third quarter earnings call. Since last speaking with you, we have strengthened our position as one of the largest, most efficient publicly traded Bitcoin mining operators in the world. The dedication of our team has resulted in an extraordinary rapid growth. We now outperform almost every single 1 of our competitors in monthly production even compared to competitors that on paper may seem bigger than us.
As a CEO and founder, I hope you'll excuse a little cheerleading, but I don't think it is at all an exaggeration to say that we are the best bet in the space. We have a proven track record of doing what we say we'll do. And to that point, we have hit or exceeded every milestone we've set for ourselves. This company and the people who work here, are best in class in every way.
Now before I get into the details on the quarter, I want to take a moment and announce that we have fully funded our growth to 16 exahash. This includes machines, materials and everything else, nuts to bolts that goes into building a world-class Bitcoin mining facility and bridging the gap to 16 exahash per second. This creates certainty for our shareholders around our future and puts any questions to bed about our path to 16 exahash per second.
We are building transformational infrastructure with almost 90,000 machines deployed and another 60,000 on hand or pending delivery for a total fleet of approximately 150,000 state-of-the-art miners, all fully funded. We are operating over 9 exahash per second, and over the next half of the year, we expect to add an additional 7 exahashes per second after energizing the expansion of our data center in Sandersville, Georgia.
That expansion, I again would like to state is fully funded. I know this has been an important question for many of you. There is no longer any uncertainty about when we will have the funds in hand to pay for the expansion and the miners. That day is today. Our track record speaks for itself. So far, this fiscal year, which for us started on October 1, 2022, we have mined over 5,600 Bitcoins through July. That speaks not only to our scale, which is substantial, but also to our skill as operators.
We run the most efficient facilities at scale in the industry. We have among the highest hashrate realization rates of any publicly traded company. This is a key metric for our shareholders to understand, because it doesn't matter if a company has 200,000 machines, if those machines aren't plugged in and hashing.
We maintain industry-leading uptime at scale and not only are we becoming ever more efficient as operators, but our efficiency at the machine level is also becoming unmatched by our competitors. We use technology to maximize our fleet efficiency. Fleet efficiency matters because it means we can mine more Bitcoins with less power. This is a win for our margins and a win for the Bitcoin mining network. It allows for us to pack more hashrate into our existing infrastructure, and as machines become more powerful and more efficient, we are poised to take advantage of some of these synergies in rather sophisticated ways.
As of our latest report at the end of July, we reported that our fleet-wide efficiency is approximately 29 joules per terahash. This is good, but not good enough for us. Once all the XPs that are on hand or ordered are plugged in and hashing, we expect to see our efficiency improve significantly, coming in at approximately 25 joules per terahash. We believe this rating will make us one of the most, if not the most, efficient Bitcoin miners at scale on the network producing more Bitcoin, expanding our margins and driving more revenue to our bottom line.
We've maintained hashrate gains to deliver impressive revenue over the 9-month period reported today. Now Gary will provide more details about the quarter, but through June 30, we've generated over $115 million in revenue. Our balance sheet has been strong and is growing stronger, and as of this call, today, our unaudited cash balance is over $90 million. We have minimal long-term outstanding debt, and we hold approximately 1,200 Bitcoin.
With our CapEx now funded through 16 exahash per second, we have increased flexibility to continue to grow our Bitcoin treasury. We are pragmatic about how we manage our Bitcoin balance with the goal of creating the best outcome for our shareholders.
We believe we can do this best by being strategic and not ideological and by being responsive to market dynamics. Right now, that means moving some of our liquidity into Bitcoin. We see substantial momentum building across the Bitcoin ecosystem and we intend to gradually grow our Bitcoin balance. Doing so underscores our commitment to Bitcoin and our critical role in building Bitcoin infrastructure.
Bitcoin is a remarkable advancement in human history. As we are fond of saying, it is just getting started. Over the last few months, we have seen a string of high-profile institutional investors, make serious moves in the Bitcoin ecosystem, including multiple spot ETFs waiting for approval. Now while many of these have languished for months and even years, there are signs of potentially favorable movement on the horizon. For example, BlackRock's application for a spot ETF, the largest asset manager in the world is 1 such opportunity.
BlackRock has successfully filed hundreds of ETFs and has only ever once not been approved. Their track record suggests that they believe there is a path to successfully launch an ETF. Now although there can be no guarantee this will occur, if it does, we would expect to see substantial inflows of funds into Bitcoin.
We believe this can make the coming months very interesting for our industry. We also see some of the regulatory scrutiny abating as Bitcoin further solidifies its position as different from other so-called cryptocurrencies. We agree with regulators that Bitcoin is a commodity and should be treated as such in all respects.
We expect the next 12 to 18 months to be transformational for Bitcoin, not only with ETFs on the horizon, but also with the coming happening and the price action we expect to see as Bitcoin continues its program trajectory of scarcity. We are very well positioned to take advantage of this momentum having just completed a 50-megawatt expansion of our data center in Washington, Georgia.
Located on the outskirts of this beautiful rural community, that facility now host almost 26,000 machines for a total hashrate of about 2.8 exahashes per second. That expansion alone has already produced 114 Bitcoins or about $3.3 million in revenue at an assumed value of $29,000 per Bitcoin since the first machine in the expansion was turned on just a few weeks ago.
The entire site is now producing nearly 7 Bitcoin a day. We work closely with community leaders to negotiate a win-win power purchase agreement that allows the city to thrive while maintaining low power costs for our operations.
Our teams and partners in Washington, led by Delston Branch, the Site Manager; Scott Garrison, our Vice President of Business Development; and Taylor Monnig, our Vice President of Mining, have worked through rain and shine, heat and cold to expand this remarkable facility.
We also acquired 2 smaller sites in Dalton, Georgia last quarter, adding 20 megawatts to our portfolio. Located in Northwest Georgia in the foothills of the Blue Ridge Mountains, Dalton is a thriving community with its own electrical utility. Our move into Dalton has allowed us to deepen our regional expertise while diversifying our utility providers. Georgia is rich in affordable energy, and Dalton is uniquely positioned as 1 of the owners of Vogtle 3.
We are eyeing several expansion opportunities in the surrounding area. With the Washington expansion now fully online and Dalton running at full capacity, we have hit all-time high hashrate of over 9 exahashes per second. And we are well on our way to achieving our target of 16 exahashes per second.
Now before discussing what the next half of the year looks like, I'd like to take a moment to reflect on how momentous this achievement is. It took us nearly 2.5 years to get to where we are today. And in the last year alone, we've grown over 200%. We are now set to nearly double our hashrate in a matter of a few months with the expansion of the Sandersville site.
Our Sandersville expansion is shaping up to be a truly impressive data center. Currently, Sandersville runs at about 80 megawatts. The expansion is expected to add another 150 megawatts, giving our data center there a total operating capacity of 230 megawatts. We believe the expansion will make it the largest Bitcoin mining campus in the South. Once complete, the expansion will consist of 10 buildings, each capable of holding thousands of machines. To give you a sense of the scale here, the 2 largest buildings are the length of 3 football fields each. The site is gently tiered allowing for carefully controlled flow of air to maximize ambient cooling efficiencies.
This approach ensures machines operate at peak capacity, even during the rare times of the year when the region experiences extremely high heat. As of this call, the land has been graded. Excavation for the underground wiring starts next week, and breaker panels and other building materials are arriving on site daily. Pouring of the concrete pads and building construction is expected to start soon.
The expansion is cited directly next to a new substation, the Municipal Energy Authority of Georgia or MEAG, is building the substation. MEAG provides most of our power needs in the region, and we are very proud to continue to work with them and their partner cities. MEAG expects the substation to be finished by the end of the year. Now we are dependent on them for the construction of the substation and the related infrastructure. The delivery of the machines and the construction of the data centers to house them are within our control, and we expect to finish our work inside the next few months.
After the substation is complete, we will energize the expansion over the following weeks until we hit 16 exahashes per second and become 1 of the largest proprietary miners in North America. Of course, 16 exahash per second isn't the end of the road for us. We are opportunistic. Dalton is 1 example of potential opportunities. We've identified several avenues that would allow us to deepen our commitment to the community and expand our fleet there.
We are also eyeing several new greenfield or new build opportunities or acquisitions that we believe could provide maximum optionality for us to choose to build as fast or as slow as makes sense over the next several years through and after the next halving. As we prepare to corner more and more of the Bitcoin Networks North American hashrate, we also continue to explore opportunities that could monetize renewable projects that are expected to wait years in the queue before they are ever connected to the grid. The future is bright for Bitcoin and for CleanSpark, and we are exceptionally well positioned to make the most of the opportunities we see on the horizon. Now none of this is possible without the dedication of my management team and our teams in Georgia and Nevada that believe in this work.
We talk a lot internally about grit and what it takes to be the best. I can say without hesitation, that our teams have grit. They are the best operators in the entire industry. I'm so proud to work with them.
I'm going to turn it over to Gary now.

Gary A. Vecchiarelli

Thank you, Zach. As Zach mentioned, we have a proven track record as the last 2.5 years of execution speaks for itself. I am very humbled to be part of this management team and proud of the efforts of our operations team who have made us a top tier miner.
Let's dive into the numbers for the third quarter now. For the third quarter of 2023, we recognized $45.5 million of revenue which was an increase of approximately $14.5 million or a 47% increase. This increase was due to our growth in hashrate and thus, greater Bitcoin mined during the most recent quarter.
When compared to the preceding second quarter, our revenues increased approximately $3 million or 7%. While our hashrate remained relatively steady in the most recent quarter, the revenues increased due to Bitcoin price remaining elevated. This increase in revenues led to increases in gross profit for both the prior year and preceding quarter comparisons.
I want to point your attention to the preceding quarter comparison, where our gross profit increased $4.4 million to $24.8 million. We also saw our gross margins increase 7% from 48% to 55%. The increase in gross profit between the quarters is greater than the increase in revenues due to declines in our third quarter power costs.
I want to call that out now as I will discuss this in greater detail here in a few slides. Looking at our GAAP net loss, we decreased our net loss in both comparable periods to $14.2 million. The largest contributor to our net loss is our depreciation and amortization which is a little less than $22 million for the third quarter. As you are aware, our business model requires significant capital investment in our efforts in acquiring the newest and most efficient ASIC miners on the market, combined with our M&A efforts, that led to increases in our depreciation expense. However, we remain focused on finding the best deals on infrastructure and machines, often timing or even setting the market lows.
Our ability to hunt for good deals helps keep future depreciation expense as low as possible, though we do expect this number to grow with future purchases. Let's take a moment to discuss our adjusted EBITDA, which is a metric management uses to evaluate the profitability of its operations.
For the third quarter, our adjusted EBITDA was $13.3 million, which is an increase of $8.2 million or 160% over the same quarter last year. When compared to the immediate preceding second quarter, our adjusted EBITDA increased over $0.5 million or approximately 5%. We did see a slight dip in our adjusted EBITDA margins between the 2 quarters from 30% to 29%, which reflected several new items in the third quarter.
Foremost, the second quarter's number included a realized gain on sale of Bitcoin of approximately $1.4 million whereas the third quarter had a slight loss of $143,000. I want to point out that we started the third quarter with Bitcoin price at approximately $28,000 and Bitcoin stayed in the trading range of $20,000 and approximately $31,000 for most of the third quarter. This was a stark contrast to the second quarter, where Bitcoin price started the quarter at under $17,000.
The Bitcoin sold earlier in the year had a lower carrying value on the balance sheet than our third quarter production and this resulted in a larger variance between the periods and the realized gain/loss. Additionally, we saw greater Bitcoin impairment expense of approximately $0.5 million.
I'd like to take a moment to discuss our power costs in greater detail. You have may noticed that starting last quarter, we included a table of our power costs and breakeven analysis in the MD&A portion of our 10-Q. Here, I want to highlight our power costs and the breakdown of what is included in those power costs. We have noted that the industry does not have a standard when discussing or disclosing power costs which should include all costs incurred on the monthly utility bill in addition to the actual cost of electricity.
CleanSpark has consistently provided its all-in power costs, which includes not just the wholesale cost of electricity, but transmission and distribution charges, profit margins to the cities we operate in, taxes and other miscellaneous fees. For the third quarter, our all-in cost of power for proprietary mining sites was $0.041 per kilowatt hour. As you will see in the chart here, our true wholesale electrical cost was $0.024 per kilowatt hour. There are approximately $0.017 per kilowatt hour of other fees, which comprise over 40% of our all-in number.
These fees include charges, which vary based on power purchase agreements, we have negotiated with the 3 utilities we operate within the state of Georgia. Additionally, you'll see our power cost decreased $0.005 from $0.046 kilowatt hour approximately -- which is approximately 11% from the second quarter. This is directly attributable to our active power management strategy. And frankly, shows the value in monitoring and managing market rate power.
The second quarter saw lower temperatures, especially in January, which resulted in higher cost per kilowatt hour. However, the weather was relatively moderate in the third quarter with spring bringing lower power rates. Again, you can find our all-in cost per kilowatt hour broken down between our proprietary sites and co-locations in our MD&A section of the most recent filed 10-Q. Before I close out, I want to discuss our liquidity position. As of June 30, we had approximately $22 million of cash on hand and a total of 529 Bitcoin valued at approximately $14 million.
Our total assets were over $650 million and we've less than $18 million of debt, which represents a relatively clean and flexible balance sheet. As Zach stated earlier in the call, we currently have enough capital on hand to fully fund the capital investments to get to our 16 exahash goal, that includes machines, building materials and other infrastructure. And as of today, we have over $90 million in almost 1,200 Bitcoins, which represents approximately $125 million of liquidity and more than enough to reach our targets.
Now that we have certainty, we look forward to continuing to execute on our strategy over the next couple of months. With respect to the recent increases in our Bitcoin balance, I want to state that from my perspective, I really like the flexibility of our balance sheet and operational performance. We now have all the pieces in place from people to capital to extend our strong track record of growth and operational excellence.
With that, I will turn the call back over to Isaac.

Isaac Holyoak

Thanks, Gary. Abby, this concludes our prepared remarks. We would now like to open the line for questions from analysts.

Question and Answer Session

Operator

(Operator Instructions) And we will take our first question from Michael Colonnese with H.C. Wainright.

Michael Anthony Colonnese

First 1 for me. Great to see the power costs come down in the quarter. If you could just speak to what you've seen in the market since the quarter and the trajectory going forward, especially in light of some of the recent heat waves that we've seen across the U.S. and now that Vogtle 3 is online in the state.

Zachary K. Bradford

This is Zach. I'll fill that 1 first. Power prices have continued to remain very advantageous. This is a great thing about Georgia is we're not in Texas, and we're not contending with the power prices in the way that they are. Also, we're not seeing the heat in the same way. Yes, it's hot. Yes, we have to manage around that. But our curtailment has been incredibly limited.
I don't have the exact number, but we are able to maintain still upper 90% uptimes even after the quarter end. So really, what you should expect to see in our next update is continued extremely high realization. July has been great. We do expect probably the last 2 weeks of August are usually the hottest of the year in Georgia. What we're seeing on the power prices, though is -- they've been able to maintain fairly flat. So where we see a slight increase in August? Yes, I think so. But we are seeing the whole sub power rates to continue to maintain in the $0.02 range just like we did last quarter where we had $0.024 on average.
So all in all, we're feeling really good. We're able to keep our machines online more than I think most of our peers, and Georgia is again proving to be one of the best bets. To your last question, let me address Vogtle 3. Really, its impact is probably a little too early to tell, but it's part of the reason that we made the bet. If you understand the power cost or really just supply and demand, what Vogtle 3 is providing is additional supply base load 24/7, 365 and that should lead to increased abundance, which again, on a supply and demand curve should lead to lower cost, simple economics.

Operator

And we will take our next question from Josh Siegler with Cantor Fitzgerald.

Joshua Michael Siegler

Congrats on in the 16 exahash fully funded. I think that's quite an achievement. So congratulations on that. It actually ties into my first question, which is with the 16 exahash fully funded now, what do you view as the major risk to actually achieving that 16 exahash year-end target? How do you plan on best managing for things such as transportation of rigs and actually installing the rigs to make sure you can still hit the 16 exahash by year-end.

Zachary K. Bradford

Josh, thanks for joining the call. I appreciate the thoughtful question on this. What we focus on is what we can control. And we've been planning on this for many months. So let me address the rigs first and the miners, I should say. The miners are going to arrive months in advance is our intention. So we expect the -- if you look at that 45,000 unit order, which will be the majority of what goes into that site, is in August and September batch, which means they should be shipped late September -- or sorry, late August, early September.
And so at that point, it's just a matter of how quickly the planes can get on the ground. So I really would expect that we should have all the -- all 45,000 of those machines state side realistically, by the end of October on an outside case, it should be the first week or 2 in November.
Now from there, it comes to infrastructure. So our infrastructure is well on track to be ready ahead of time. With the minute that we have shelves available, optimally, we're storing miners for a very short period of time. and then we're putting them right on to shelves and ready to go. So everything we control between the rigs and the infrastructure, all the long lead time items have already been ordered under contract. We have all the contractors secured. So all of that is taken care of.
The risk to us are the things we don't control. And that can, of course, be utility timing or anything that relates to their side. As of right now, we feel good about the trajectory of things are going. Now of course, we can help in some ways along the process, and we're going to continue to do so to make sure that we get there as quickly as possible.
But when the power is there, it still does take time to turn the machines on. If you paid attention to what happened with our recent 50-megawatt expansion, it took us about 10 days to get -- 10, 12 days to get all those machines turned on hashing and that just comes down to the fact that we're working with a whole lot of power. It's not like flipping a light switch when it comes to 50 or 150 megawatts of power.
So for us to kind of sum that up. It's -- we're going to try and have everything we control, ready early and that way, we have plenty of buffer room on our side of the equation.

Joshua Michael Siegler

Got it, Zach. That was very helpful color. And then I was curious, if we could take a look forward, right? Once the 16 exahash target is achieved, it should set the company up to establish a larger hollow balance over time. if we're thinking about growth beyond the 16 exahash, would you view this larger hollow balance as a potential funding source for growth?

Zachary K. Bradford

Yes, absolutely. We view it also as an ROI source, because it's an asset on the balance sheet that has the ability to grow in value. And going back to the market events that we're seeing, ETFs, for example, halving is another one.
Bitcoin is built with scarcity in mind that should push the value up on a long-term basis. We also believe that the other market effects such as ETFs, but also the continued adoption rates of Bitcoin everything is trending in the right direction to show that, that will increase in value. Now as that goes up in value, we can, of course, use that to fund growth from operations like we have for the last 18 months. We've always seen it as 1 of the levers to pull to grow. And so again, from a market condition point of view, we got it right when we started selling our Bitcoin even though it was unpopular, almost what's that 18 months, almost 2 years ago when Bitcoin hit $69,000. Although unpopular, we chose to sell it because the market indicated it was time to sell. We believe the market is indicating it's time to hold on to more than other times. And we'll measure it day by day, week by week. But absolutely, we still see it as a way to fund growth.
And again, on a long-term basis, we also hope that debt markets come back into play, which are really not good opportunities there, but the more non-dilutive capital, whether it's operating or debt, the better. And on a long-term basis, we think that having a really strong balance sheet sets us up to do that and we'll look to those levers in a higher degree for future growth.

Operator

We will take our next question from Tyler DiMatteo from BTIG.

Tyler DiMatteo

Yes. I really appreciate the time here. So Zach, I was wondering if you could provide a little more color Dalton specifically? And really, what would that expansion look like realizing that Georgia is the real stronghold footprint of the company, but any color on timing there? How you would think about going about or realizing that with Vogtle 3 online, obviously, nuclear in Georgia is becoming even more important. Just any other color on that side specifically?

Zachary K. Bradford

At this time, I'm not able to provide a lot of additional information. We don't want to give away all the secrets of everything we're working on right now. So there's just opportunity. There's opportunity all over Georgia from an abundance of power point of view. To reiterate, Georgia, again, is continuing to prove out just like we made the bet 2.5 years ago, it would that power prices would be low and continue to stay low. And so that is 1 of many opportunities for expansion. When we have more information in hand, we will look forward to sharing it with everybody.

Tyler DiMatteo

Okay. Great. And then my follow-up here, I wanted to circle back on the fleet efficiency at the 29 jouals per terahash going to 25. I mean, I guess, how do you think about moving beyond the 25 potentially? And really the rig replacement cycle and just growth in general. Just curious how you're thinking about efficiency. And anything you can do to kind of improve that? I know, obviously, immersion's a big topic in the market today. But just any other color there on kind of how you're thinking about efficiency and what that could shake up to be?

Zachary K. Bradford

Yes. So that's obviously going to be an optimization strategy that is going to be required by all miners in the future. What we're actively in the process for, and if anybody has added up the exahash of total miners that we have, they're going to see it's over 16 exahash.
And we're actively in the process of doing some upgrades that will lead to I'm going to call it a midterm fleet efficiency improvement between now and the end of the year. And we think that, that's going to get us halfway to 25 exahash. And then once we get everything installed and online, really, there won't be -- we don't expect at halving that there will be anything in our fleet that will have an efficiency over 30.5 watts per terahash. All the machines will have been upgraded and shifted from there. Now what does that mean for the machines that we pull out of cycle.
There's obviously a couple of things to do with them. We can keep them and look to deploy them in maybe more remote situations where power is extremely cheap, but maybe where there's uncertainty of timing. This can be anything from flare gas to small sites in Africa or we can just sell them and turn them into capital and keep buying and building more efficient facilities.
So we see that as a point of optionality. So we are going to have a stack of lower-efficient miners. But what the bull market has always proven when you look back and how many S19s were suddenly flying off shelves, for prices for what you can actually nearly buy an S17 or an S19 for today, that's another opportunity as you stack the less efficient machines in a warehouse and the next bull run, they're worth their waiting gold again. So we see that as a point of optionality, but we don't expect to have anything plugged in halving that would have an efficiency under -- or above 30.5 watts per terahash.

Operator

We will take our next question from Brian Dobson with Chardan.

Brian H. Dobson

So interesting thoughts that you shared on the potential approval to spot ETF. I suppose, what are your thoughts on the time line for that approval? And do you have any estimate for how much capital we could see directed toward this line if 1 of those is approved?

Zachary K. Bradford

Anything I would say is going to be maybe a guess. But I expect it will be a matter of months, not years. If Mike Novogratz yesterday got pretty public during their earnings call and some follow-on comments that his belief from insiders at BlackRock was that it would be 4 to 6 months out. He probably has better information than I do on this. So that's probably a good indication.
But we have had conversations with market participants, over the past few months. And I do see it as something that is likely -- it's something that happened in the very near term. So really looking forward to that.
From a capital point of view, I think it's going to just come down to percentages. There's a lot of money being managed out there. And once ETFs from these big firms come into play, there's nothing to stop somebody from putting 1% or 0.5% or even 0.1% into these ETFs.
And when you think about the trillions under management, that could potentially a very large dollar amount that flows into Bitcoin. But what that is and how much funds would -- or family office would consider to allocate into any of these ETFs. It's just a guess. I do think that the regulatory certainty is a really big part of this, which, again, we mentioned we think is coming.
So even if when the ETFs come into play, there's not all the potential capital that comes in, maybe we need another 12 months after that of additional regulatory certainty and when that happens, we could see a second wave, I think. So I think this is a 2-step process potentially unless from a commodities point of view, that certainty speeds up just a little bit more.

Operator

We will take a follow-up question from Josh Siegler with Cantor Fitzgerald.

Joshua Michael Siegler

I just wanted to touch on immersion cooling. Now that you've been cashing in immersion for quite some time, I'm curious if you can comment on the efficiency gains you're seeing from immersion? And any color you have on its operations as well would be helpful.

Zachary K. Bradford

Yes, absolutely. So we really like the results we're seeing from immersion. And I also think in future generation of miners as the chips get more efficient and the nanometers get smaller, it therefore produces more heat potentially, immersion is going to become more and more important.
And so as part of that, I really do think that in '24 and later, we'll look to build more immersion cool facilities. We specifically said that when we built Norcross that we knew it wasn't going to be the biggest site that we owned. It's actually amongst our smallest currently, but it allowed us to learn everything we needed to learn.
Currently, it is running perfectly flat all the time, 24/7, repair and downtime is substantially better than air cool. And so again, we're extremely happy from the results we've seen. We've also learned a couple of things that we would change in the future. So I do think in 2024 and later, we'll be ready to move into more large-scale immersion facilities.
Now when it comes to performance, we do gain some flexibility in immersion and so there's a lot of headlines and a lot of talk about the ability to overclock 100%, and that's not something we're interested in doing because the efficiency goes out the window. But instead, what we're seeing is we can hash at 8% to 15% better and maintain or improve the base plate or nameplate efficiency of many of these machines. So it allows us to make gains on efficiency while maintaining those miners, very healthy temperatures, very long life, happy environment for them to be in. So we're happy with smaller gains, higher efficiency, which again drives more to the bottom line. So that's where we're going to focus on our immersion in the future.
We're not going to try and do these massive over clocks because efficiency does go out the window. And that's, I guess, the point of risk, I would say, for -- to -- when investors do hear about that is you just need to know that, that comes at a cost.
So again, you can overclock when Bitcoin goes to $69,000, it sounds great. But when Bitcoin comes down to current levels or even lower like we saw in the winter, under clocking is actually more valuable. So flexibility is the real value in immersion cooling.

Operator

And ladies and gentlemen, with that, we will conclude today's conference. We thank you for your participation, and you may now disconnect your lines.