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5. ACQUISITIONS | 12 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
ACQUISITIONS | . ACQUISITIONS Pending Acquisitions GRIID Infrastructure Inc. On June 26, 2024, the Company entered into an Agreement and Plan of Merger (the “GRIID Agreement”) with GRIID Infrastructure Inc., Nasdaq ticker “GRDI”, a Delaware corporation (“GRIID”), and Tron Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and a wholly owned subsidiary of the Company. The transaction closed on October 30, 2024 (the “Effective Time” of the merger). Concurrent with the GRIID Agreement, the Company and GRIID entered into a senior secured term loan credit agreement (the “GRIID Credit Agreement”) and a co-location mining service agreement (the “Hosting Agreement”) on June 26, 2024. See Note 7 - Note Receivable from GRIID for more information on the GRIID Credit Agreement. Pursuant to the Hosting Agreement, GRIID hosted certain of the Company’s bitcoin mining equipment at GRIID facilities for a fee defined in the Hosting Agreement. The Hosting Agreement had an initial service term of one year with seven additional renewal terms, each for six months. The GRIID Agreement provided that, among other things and subject to the terms and conditions of the GRIID Agreement, (1) Merger Sub will be merged with and into GRIID (the “Merger”), with GRIID surviving and continuing as the surviving corporation in the Merger, and, (2) at the Effective Time of the Merger, holders of each outstanding share of common stock, par value $0.0001 per share, of GRIID (“GRIID Common Stock”) would receive, in exchange for each share of GRIID Common Stock held immediately prior to the Merger (other than certain excluded shares), that number of shares of common stock, par value $0.001 per share, of the Company’s common stock (“Company Common Stock”) equal to the quotient obtained by dividing the Aggregate Merger Consideration (as defined in the GRIID Agreement) by the total number of shares of GRIID Common Stock issued and outstanding as of the closing date of the Merger (the “Exchange Ratio”). Pursuant to the Merger Agreement, at the Effective Time: • each GRIID restricted stock unit award that was outstanding immediately prior to the Effective Time immediately vested with respect to 100% of the shares of GRIID Common Stock subject to such GRIID restricted stock unit award, which shares of GRIID Common Stock were converted into the right to receive the merger consideration with respect to each share of GRIID Common Stock. Further, each outstanding vested compensatory option to purchase shares of GRIID Common Stock was canceled and converted into the right to receive approximately 0.01 of a share of Company Common Stock, which is the number of shares equal to the quotient of (i) the product of (A) the excess, if any, of the Merger Consideration Value (as defined in the GRIID Agreement) over the per share exercise price of the applicable option, multiplied by (B) the number of shares of GRIID Common Stock subject to such option immediately prior to the Effective Time, divided by (ii) $16.587, which represents the volume-weighted average price of Company Common Stock for the two consecutive trading days prior to the date of the GRIID Agreement. Any GRIID options that had an exercise price per share of GRIID Common Stock that was equal to or greater than the Merger Consideration Value were canceled for no consideration; and • each outstanding and unexercised warrant (each, a “GRIID Warrant”) to purchase shares of GRIID Common Stock was converted into a warrant to purchase a number of shares of Company Common Stock (each, a “Company Warrant”), rounded down to the nearest whole share, that is equal to the product of (A) the number of shares of GRIID Common Stock subject to such GRIID Warrant as of immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio. The exercise price per share of Company Common Stock underlying such converted Company Warrant is equal to the quotient obtained by dividing (x) the per share exercise price applicable to such warrant immediately prior to the Effective Time by (y) the Exchange Ratio, rounded up to the nearest whole cent. Each such Company Warrant is on the same terms and conditions as were applicable under such GRIID Warrant immediately prior to the Effective Time, except for such terms rendered inoperative by reason of the Merger or as otherwise set forth in the GRIID Agreement. Upon closing, the Company issued 5,031,254 shares of Company Common Stock on October 30, 2024 with a $12.06 per common share value for a total approximate value of $60,600. GRIID RSUs were converted, vested GRIID options were converted or cancelled, and the GRIID Warrants outstanding and unexercised immediately prior to the Effective Time were automatically converted into warrants to purchase 960,395 shares of the Company’s common stock (the “Common Stock”), at an exercise price of $165.24 per share of Common Stock (the “Company Public Warrants”), and the GRIID private warrants were converted or assumed. Due to the timing of the transaction closing on October 30, 2024, the Company is evaluating the impact of this acquisition on its consolidated financial statements; it is impracticable to disclose the preliminary purchase price allocation. Therefore, disclosures related to the acquisition, including the pro forma consolidated results and adjustments, amounts of major assets acquired and liabilities assumed, valuation method used to determine the fair value of the consideration transferred, qualitative factors about the goodwill recognized, and goodwill expected to be deductible for tax purposes are not yet available. Disclosures regarding the impact of the acquisition will be provided in subsequent filings as the evaluation is finalized. The primary purpose of the acquisition is to expand its mining capacity geographically. The acquisition will be accounted for as a business combination. Completed Asset Acquisitions Tennessee Acquisition On September 10, 2024, CleanSpark TN, LLC, a wholly-owned subsidiary of the Company (the “TN MIPA Buyer”), entered into three definitive Membership Interest Purchase Agreements (each, a “MIPA”, and collectively, the “TN MIPAs”) with Exponential Digital, LLC (the “TN MIPA Seller”) to acquire seven bitcoin mining facilities located in Tennessee for a total purchase price of $25,000. Also on September 10, 2024, CSRE Properties Tennessee, LLC, a wholly-owned subsidiary of the Company, entered into a Real Estate Purchase and Sale Agreement (the “RE PSA”) with US Farms & Mining, Inc. to purchase real property that was leased by the TN MIPA Seller for purposes of conducting operations of four of the mining locations. Under the terms of the RE PSA, CSRE Properties Tennessee, LLC will pay US Farms & Mining, Inc. an aggregate consideration of $2,500. The total consideration set forth to be paid per the agreements is $27,500. The cities of the bitcoin mining facilities for each MIPA are as follows: MIPA 1: Jellico, TN and West Crossville, TN; MIPA 2: Campbell Junction, TN and Decatur, TN; and MIPA 3: Winfield, TN; Oneida, TN; and Tazewell, TN. The Company completed the acquisition of MIPA 1 and MIPA 3 on September 16, 2024 and September 25, 2024, respectively. Meanwhile, the Company closed on MIPA 2 and the RE PSA in October 2024; see Note 19 - Subsequent Events. The transaction was accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. T he combined purchase price is $28,103, which includes $27,500 in cash considerations payable to the TN MIPA Seller per the MIPAs and RE PSA, $231 incurred for direct acquisition costs, and $372 in assumed lease liabilities. As of September 30, 2024, the Company has paid or incurred $18,376 of the total purchase price and the difference between (1) the amount paid and incurred pursuant to direct transaction costs and (2) the amount allocated for completed components of the asset acquisition is recorded in Other long-term asset on the Consolidated Balance Sheets in the amount of $4,731. The expected total purchased assets and liabilities upon completion of all MIPAs and RE PSA is presented below as “Expected Total Allocation Including Subsequent Periods” and the allocation of the assets associated with MIPA 1 and MIPA 3 is included in “Allocation as of September 30, 2024” in the table below:
($ in thousands) |  | Allocation as of September 30, 2024 |  | Expected Incremental Acquisitions In Subsequent Periods |  | Expected Total Allocation Including Subsequent Periods |
Land |  | $ | — |  | $ | 5,820 |  | $ | 5,820 |
Land improvements |  |  | — |  |  | 610 |  |  | 610 |
Building |  |  | — |  |  | 758 |  |  | 758 |
Infrastructure |  |  | 14,897 |  |  | 5,957 |  |  | 20,854 |
Right of use assets |  |  | 47 |  |  | 14 |  |  | 61 |
Operating lease liability |  |  | (344 | ) |  | (28 | ) |  | (372 | )
Total |  | $ | 14,600 |  | $ | 13,131 |  | $ | 27,731 |
The Company assumed lease liabilities as of September 30, 2024 of $344. Under the terms of the TN MIPAs, the TN MIPA Buyer will pay the TN MIPA Seller the respective consideration under each MIPA described above (less an aggregate holdback amount of $1,250, subject to adjustment as set forth in the TN MIPAs) at the respective closing of each MIPA. The holdback amount is payable 60 days following the close of each MIPA, the total holdback amount of $955 attributable to MIPA 1 and MIPA 3 is due in November 2024 (included in Accrued liabilities in the Consolidated Balance Sheets as of September 30, 2024). Mississippi Acquisition - Clinton, MS On September 16, 2024, CSRE Properties Mississippi, LLC, a Mississippi limited liability company and wholly-owned subsidiary of the Company, entered into definitive agreements with Eyas Investment Group and Makerstar Capital, Inc. (“Makerstar”) to acquire bitcoin mining facilities in Clinton, Mississippi (the “Clinton Property”). The combined purchase price (including direct acquisition costs of $129) for the real property, construction in progress and personal property was approximatel y $3,020. The transaction was consummated in September 2024 and accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. The allocation of the purchase price of the assets acquired are summarized below:
($ in thousands) |  | Allocation at Acquisition Date |
Land |  | $ | 734 |
Construction in progress |  |  | 2,286 |
Total |  | $ | 3,020 |
In connection with the acquisition of the Clinton Property, CSRE Properties Mississippi, LLC entered into a Construction Management Services Agreement dated September 16, 2024 with Beast Power, Inc. (“Beast Power”), pursuant to which Beast Power was engaged to manage the completion of the con struction of a data center facility on the Clinton Property for aggregate consideration of $2,888. The construction is expected to be substantially complete by December 2024. Wyoming Acquisition - Cheyenne, WY On May 8, 2024, CSRE Properties Wyoming, LLC, a Wyoming limited liability company and wholly-owned subsidiary of the Company (the “Wyoming Buyer”) entered into a Purchase and Sale Agreement with MineOne Wyoming Data Center LLC (“MineOne”), pursuant to which the Wyoming Buyer agreed to purchase real property located in Wyoming. On May 29, 2024, the Wyoming Buyer entered into new purchase and sale agreements with MineOne, collectively amending and restating the original agreement dated May 8, 2024 due to federal regulatory consent requirements relating to Parcel 1. As a result, the agreement was renegotiated and split into two agreements: the first agreement for Parcel 1, with a purchase price of $11,250, and the second agreement for Parcel 2, with a purchase price of $11,250, with no contingent payment requirements for either parcel. In order for the federal agency to approve the transaction and for the Company to complete the acquisition of the land from MineOne, the assets on-site had to be demolished and the personal property had to be removed. On August 2, 2024, the Company and MineOne entered into an Asset Purchase Agreement (“APA”) with a purchase price of $1,500, subsequently amended to $1,300, to acquire infrastructure assets. The Company closed on the purchase of Parcel 2 on July 11, 2024 with a combined purchase price (including direct acquisition costs of $147) of $11,397. The Company closed on the purchase of Parcel 1 on September 11, 2024 with a combined purchase price (including direct acquisition costs of $470) of $11,720. The direct acquisition costs for Parcel 1 included the cost of demolition. In addition, the Company purchased a parcel of raw land adjacent to Parcel 2 from Campstool Land Company, LLC on August 7, 2024 for a purchase price (including direct acquisition costs of $23) $1,523. The Wyoming transactions were accounted for as asset acquisitions, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. As a result, the total cost of the Wyoming land purchased was $24,640, 100% of which was allocated to land. LN Energy LLC Acquisition - Georgia On June 17, 2024, CleanSpark, Inc., through its wholly-owned subsidiary, CSRE Properties Sandersville, LLC (the "LN Energy Buyer"), entered into six (6) definitive agreements to acquire bitcoin mining facilities located in Georgia from, respectively, LN Energy 1 LLC, LN Energy 3 LLC, LN Energy 4 LLC, LN Energy 5 LLC, LN Energy 6 LLC and LN Energy 7 LLC (collectively, the “LN Energy Seller”). The definitive agreements include the purchase of mining data centers, the assumption of the underlying real property leases and one power agreement. The combined purchase price was $26,177, which included $25,800 paid to the LN Energy Seller, $132 incurred for direct acquisition costs, and $244 in assumed lease liabilities. T he transaction is accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. The allocation of the purchase price of the assets acquired and liabilities assumed are summarized below:
($ in thousands) |  | Allocation at Acquisition Date |
Building/Improvements |  | $ | 1,809 |
Infrastructure |  |  | 21,818 |
Right of use assets |  |  | 2,550 |
Operating lease liability |  |  | (244 | )
Total |  | $ | 25,933 |
Mississippi Locations Acquisition - Meridian, Vicksburg and Wiggins, MS On February 26, 2024, the Company, through its wholly-owned subsidiary CSRE Properties Mississippi, LLC, closed on the Purchase and Sale Agreement entered into with Makerstar on February 5, 2024, pursuant to which the Company agreed to purch ase three bitcoin mining facilities in Mississippi for $19,771 (including direct acquisition costs of $148). The three facilities are located in Meridian, Vicksburg, and Wiggins, respectively. The transaction was accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. The allocation of the purchase price of the assets acquired is summarized below:
($ in thousands) |  | Allocation at Acquisition Date |
Land |  | $ | 1,304 |
Building/Improvements |  |  | 7,525 |
Infrastructure |  |  | 10,942 |
Total |  | $ | 19,771 |
Dalton 3 Acquisition - Dalton, GA On February 2, 2024, the Company, through its wholly-owned subsidiary CSRE Properties Dalton, LLC, entered into two purchase agreements with Makerstar. and its wholly-owned subsidiary, Eyas Investment Group, respectively, for approximately two acres of real property (the “Dalton Property”) located in Dalton, Whitfield County, Georgia and all improvements, fixtures and personal property situated on the Dalton Property. The Dalton Property was in the early stages of construction and included a concrete foundation and in-process electrical infrastructure at the time of entry into the respective agreements. The combined purchase price (including direct acquisition costs of $132) for the real property and improvements, fixtures and personal property was approximatel y $3,569. The transaction was consummated in February 2024 and accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. The allocation of the purchase price of the assets acquired is summarized below:
Purchase Price Allocation: ($ in thousands) |  | Allocation at Acquisition Date |
Land |  | $ | 327 |
Building/Improvements |  |  | 702 |
Infrastructure |  |  | 2,540 |
Total |  | $ | 3,569 |
In connection with the acquisition of the Dalton Property, the Company entered into a Construction Management Services Agreement dated February 1, 2024 with Makerstar, pursuant to which the Company engaged Makerstar to manage the completion of the con struction of a data center facility on the Dalton Property for aggregate consideration of $3,435. The construction was substantially completed, and the facility began bitcoin mining operations, on April 4, 2024. Dalton 1 & 2 Acquisition - Dalton, GA On June 21, 2023, the Company completed the acquisition of two bitcoin mining facilities in Dalton, Georgia for $9,389. Each of the facilities are located on separate one acre sites, each of which are under land leases. The transaction was accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition. The allocation of the purchase price of the assets acquired and liabilities assumed are summarized below:
($ in thousands) |  | Allocation at Acquisition Date |
Building |  | $ | 1,328 |
Infrastructure |  |  | 8,061 |
Land lease - right of use asset |  |  | 266 |
Operating lease liability |  |  | (266 | )
Total |  | $ | 9,389 |
Mawson Infrastructure Group - Sandersville, GA On October 8, 2022, the Company completed the acquisition of a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia (the “Mawson Property”), all personal property located on the Mawson 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 and an Equipment Purchase and Sale Agreement dated September 8, 2022 (the "Mawson Transaction"). The Company paid the following consideration to Mawson for the Mawson Property: (i) $13,500 in cash; (ii) 1,590,175 shares (the “Closing Shares”) of the Company's common stock (which had a value of $4,803 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 promissory note. The Company also paid $9,018 in cash within 15 days of the closing for the ASICs. The following additional contingent consideration was included in the purchase price: • up to 1,100,890 shares of the Company's common stock (the “Earn-out Shares”) (which have a value of approximately $3,325 based upon the closing price of the Company's common stock on October 7, 2022), based upon the number of modular data centers on the Mawson Property occupied by Mawson being emptied and made available for the Company’s use. These Earn-out Shares had been classified as a liability in the Consolidated Balance Sheets in accordance with ASC 480, and accordingly, were 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 $484 in Other Income (expense) in the Consolidated Statements of Operations and Comprehensive Loss. The shares associated with the earn-out were issued to Mawson in January 2023 (see Note 14 - Stockholders' Equity). • up to an additional $2,000 in a seller-financed earn-out payable at least 60 days post-closing if the Company receives written confirmation that it will be able to utilize at least an additional 150 MW of power on the Mawson Property by the six-month anniversary of the closing, April 8, 2023. Such written confirmation was not received by April 8, 2023, and accordingly, the Company determined t his contingency criteria was not met by April 8, 2023 and has not paid the additional consideration. The Company adjusted the contingency liability to $0 as of June 30, 2023 and recognized $2,000 gain in Change in Fair Value of Contingent Consideration on the Consolidated Statements of Operations and Comprehensive Loss. The Company accounted for this transaction as an acquisition of a business. The fair value of the consideration given to Mawson and the other sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows:
($ 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) |  | 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 |
There were no subsequent adjustments to the allocation of the purchase price after the preliminary allocation.

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