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16. COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Purchase of bitcoin miners The Company had $232,822 in open purchase commitments for miners or mining equipment as of June 30, 2024. These commitments pertain to the purchase transactions with Bitmain Technologies Delaware Limited ("Bitmain Technologies") signed in October 2023, January 2024, and April 2024 for the purchase of 22,050, 60,000 and 100,000 Antminer S21 and S21 Pro bitcoin mining machines with total purchase prices of $61,740, $193,200, and $374,400 (after coupons), respectively, and a cost per terahash of between $16.00-16.10. As of June 30, 2024, the Company has made combined payments of $386,125 and has accrued $10,392 for payment included in a ccounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. In connection with the October 2023 miner transaction, the purchase agreement allowed for a portion of the purchase price to be paid one year after shipment of the miners. Purchase of mobile data centers The Company entered into a $165,000 contract subject to certain discounts in June 2024 for the purchase of mobile data centers. The contract includes two phases for which only phase 1 is a firm commitment to the Company in the amount of $66,000 (before taxes and discounts), for which approximately 50% was paid in July and the remainder is expected to be due in October and November 2024. If within 60 days after the contract execution date, the Company elects to undertake phase 2 for $99,000 (before taxes and discounts), then approximately 50% of the payment would be due within 90 days of such election. Only the phase 1 commitment is presented in the table below (before taxes and discounts) as the Company has not elected phase 2 yet. Commitments on asset purchases In June 2024, the Company entered into a purchase contract for the asset acquisition of an aircraft for $10,800, and has made a deposit of $500, which is recorded in Other long-term assets on the Condensed Consolidated Balance Sheet as of June 30, 2024. The remainder of the purchase price will be paid in the August 2024. Commitments under open construction projects The Company has open commitments of $8,791 relating to construction related contracts pertaining to the development of new mining locations and operational facilities. Contractual future payments The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of June 30, 2024 (Fiscal Year 2024 excludes nine months ended June 30, 2024):
($ in thousands) |  | Remainder of Fiscal Year 2024 |  |  | Fiscal Year 2025 |  |  | Fiscal Year 2026 |  |  | Fiscal Year 2027 |  |  | Fiscal Year 2028 |  |  | Thereafter |  |  | Total |
Recorded and unrecorded contractual obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease obligations ** |  | $ | 103 |  |  | $ | 296 |  |  | $ | 299 |  |  | $ | 204 |  |  | $ | 142 |  |  | $ | 781 |  |  | $ | 1,825 |
Finance lease obligations ** |  |  | 14 |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23 |
Loans ** |  |  | 2,212 |  |  |  | 8,541 |  |  |  | 898 |  |  |  | 303 |  |  |  | 104 |  |  |  | 38 |  |  |  | 12,096 |
Construction in progress |  |  | 8,791 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,791 |
Miners |  |  | 149,759 |  |  |  | 83,064 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 232,823 |
Mobile data centers |  |  | 33,000 |  |  |  | 33,000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 66,000 |
Asset purchases |  |  | 10,300 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 10,300 |
Total |  | $ | 204,179 |  |  | $ | 124,910 |  |  | $ | 1,197 |  |  | $ | 507 |  |  | $ | 246 |  |  | $ | 819 |  |  | $ | 331,858 |
** Represents a recorded contractual obligation, including interest component Legal contingencies In addition to the legal matters disclosed below, the Company may from time to time be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected. Bishins v. CleanSpark, Inc. et al. On January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the “Class”), filed a class action complaint in the United States District Court for the Southern District of New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief Financial Officer at the time, Lori Love (“Love”) (such action, the “Class Action”). Subsequent to the filing of the Class Action, Darshan Hasthantra, as lead Plaintiff (together with Bishins, the “Plaintiffs”), filed an amended complaint (the “Amended Class Complaint”), which named S. Matthew Schultz (“Schultz”) as a defendant (the Company, Bradford and Schultz, collectively, the “Defendants”) and no longer named Love as a defendant. The Amended Class Complaint alleges that, between December 10, 2020 and August 16, 2021 (the “Class Period”), Defendants made material misstatements and omissions regarding the Company’s acquisition of ATL and its anticipated expansion of bitcoin mining operations and seeks: (a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation. During a March 20, 2024 status conference, the judge expressed her expectation that the parties attend mediation, accordingly, the partied are currently scheduled to attend mediation on September 6, 2024. To date, no class has been certified in the Class Action, and the case is moving forward in discovery. The Company believes that the claims raised in the Amended Class Complaint are without merit. The Company intends to defend itself vigorously against these claims. At this time, the Company is unable to estimate potential losses, if any, related to the Amended Class Complaint. Consolidated Ciceri Derivative Actions On May 26, 2021, Andrea Ciceri (“Ciceri”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Ciceri Derivative Action”) in the United States District Court in the District of Nevada against certain of the Company’s officers and directors (collectively referred to as “Ciceri Derivative Defendants”) (Ciceri v. Bradford, Schultz, Love, Beynon, McNeill and Wood). On June 22, 2021, Mark Perna (“Perna”) (Ciceri, Perna, and Ciceri Derivative Defendants collectively referred to as the “Parties”) filed a verified shareholder derivative action (the “Perna Derivative Action”) in the same court against the same Ciceri Derivative Defendants, making substantially similar allegations. On June 29, 2021, the Court consolidated the Ciceri Derivative Action with the Perna Derivative Action in accordance with a stipulation among the Parties (the consolidated case referred to as the “Consolidated Ciceri Derivative Action”). The Consolidated Ciceri Derivative Action asserts claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets and seeks declaratory relief, monetary damages, and the imposition of adequate corporate governance and internal controls. In June 2023, the Company’s Board of Directors appointed a special litigation committee (the “SLC”), comprised of independent Directors and represented by independent counsel, to intervene in the case, investigate, evaluate and prosecute as appropriate any and all claims asserted in the Consolidated Ciceri Derivative Action as well as the Consolidated Smith Derivative Actions (defined below). On October 23, 2023, the Court stayed the case until July 23, 2024, pending the completion of the SLC’s investigation. On July 3, 2024, the SLC requested an extension of the stay until August 9, 2024, which the court granted on July 23, 2024. The Company believes that the claims raised in the Consolidated Ciceri Derivative Action are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims. At this time, the Company is unable to estimate potential losses, if any, related to the Consolidated Ciceri Derivative Action. Consolidated Smith Derivative Actions On February 21, 2023, Brandon Smith (“Smith”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (Smith v. Bradford, Love, Schultz, Beynon, McNeill and Wood). On February 24, 2023, Plaintiff Nicholas Iraci (“Iraci”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (Iraci v. Bradford, Love, Schultz, Beynon, McNeill and Wood). On March 1, 2023, Plaintiff Eric Atanasoff (“Atanasoff”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s Officers and Directors (Atanasoff v. Bradford, Schultz, Beynon, McNeill, and Wood). On March 8, 2023, Plaintiff Travis France (“France”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (France v. Bradford, Love, Tadayon, Schultz, Beynon, McNeill and Wood). Ultimately, each of the aforementioned derivative actions were consolidated into the Smith Derivative Action in the Eighth Judicial District Court of Nevada (the “Consolidated Smith Derivative Actions”). The operative Consolidated Smith Derivative Actions assert claims of breach of fiduciary duties, unjust enrichment and corporate waste and seek monetary damages, restitution, declaratory relief, litigation costs, and the imposition of adequate corporate governance and internal controls. On November 6, 2023, the Court stayed the Consolidated Smith Derivative Actions for five months pending the completion of the SLC’s investigation. On request by the SLC, the stay was extended through July 8, 2024 and was again extended through July 23, 2024. In its most recent status report dated July 9, 2024, the SLC indicated it expected to conclude the deliberations of its written report on or before August 9, 2024. The Company believes that the claims raised in Consolidated Smith Derivative Actions are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims. At this time, the Company is unable to estimate potential losses, if any, related to the Consolidated Smith Derivative Actions.

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