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CORRESP
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  CORRESP

  September 15, 2023

  VIA EDGAR

  U.S. Securities and Exchange Commission

  Division of Corporation Finance

  100 F Street, N.E.

  Washington, D.C. 20549

    Attention:

Ms. Sandra Hunter Berkheimer

    Ms. Sonia Bednarowski

Ms. Kate Tillan

Ms. Bonnie Baynes

    Re:

    CleanSpark, Inc.

    Form 10-K for the Fiscal Year Ended September 30, 2022

    Filed December 15, 2022

    Form 10-Q for the Quarterly Period Ended June 30, 2023

    Filed August 9, 2023

    File No. 001-39187

  Dear Ms. Tillan and Ms. Bednarowski:

                 This letter is being furnished on behalf of CleanSpark, Inc. (the “Company,” “we” or “us”) in response to the comment received from the staff of the Division of Corporation Finance Office of Crypto Assets (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) by letter dated August 17, 2023, regarding the Company’s Form 10-K for the Fiscal Year Ended September 30, 2022 (the “10-K”) (File No. 000-39187) filed on December 15, 2022 and the Company’s Form 10-Q for the Quarterly Period Ended June 30, 2023 (the "10-Q") (File No. 001-39187) filed on August 9, 2023.

                The text of the Staff’s comment has been included in bold and italics for your convenience, and we have numbered the paragraph below to correspond to the number in the Staff’s letter.  For your convenience, we have also set forth the Company’s response immediately below the numbered comment.

  Form 10-K for the fiscal year ended September 30, 2022 General

  1.Refer to your response to comment 1. Please revise to include a footnote to your table to disclose how you calculated the weighted average cost of mining one bitcoin. In addition, in future filings, please revise the table to disclose the range of values of bitcoin during the periods covered by the table as well as the source or sources for determining the value of bitcoin.  In this regard, we note your disclosure in your Form 10-Q for the quarterly period ended March 31, 2023 that the market price of one bitcoin in your principal market ranged from approximately $15,460 to $29,190 during the six months ended March 31, 2023.

  Response:  The Company confirms that, in future filings, a footnote will be added to the table to disclose how the weighted average cost of mining one bitcoin is calculated and will also include a reference to the range of values of bitcoin during the periods presented.  Specifically, the footnote to the table will state: "Weighted average cost of mining one bitcoin is calculated by dividing the sum of total energy expense and other direct costs of mining-non energy utilities (owned facilities) and total hosting fee expense (hosted facilities) by the total bitcoin mined during the respective periods.".  We will also include, in future filings, a footnote to the table that describes how the average revenue of each bitcoin is calculated.  The footnote will also reference the range of values of each bitcoin as determined by the Company's principal market (Coinbase) during the respective periods, which will

  be consistent with the table that is provided in Management's Discussion and Analysis of Financial Condition and Results of Operations in the table titled "Range of intraday bitcoin prices."

  Lines of Business, page 5

  2.Refer to your response to comment 2 that you do not currently have location-based data on energy sources.  However, in your investor presentation filed as an exhibit to your February 16, 2023 8-K, it appears that you disclose energy sources by location.  Please clarify your response and, in addition, in future filings, please identify the location of the facilities pursuant to your co-location agreement with Coinmint, LLC.

  Response:  Location-based reporting methods reflect the average emissions intensity of grids on which energy consumption occurs, generally using grid-average emission factor data.  The Company discloses its energy mix as reported to it by its power providers or hosting partner, which are Georgia Power, Municipal Energy Authority of Georgia (including MEAG's respective member cities, which function as the Company's utility providers in the cities in which it operates), Dalton Electric, and CoinMint, LLC. Reported power mixes are utility and site-specific for the city in which the power is consumed. These site-specific power providers have unique power purchase agreements which result in differing energy mix composition for each site. This data is reported to us and/or the general public on a voluntary basis.  The Company is currently working with a third-party provider to determine the more specific, if less granular, location-based carbon emissions reporting metric, which may differ from that reported by our power providers or hosting partner.

  Cybsersecurity, page 10

  3.Refer to your response to comment 2 that Coinbase provides, obtains and maintains insurance coverage in such types and amounts as are commercially reasonable for the custodial services provided.  In future filings, please disclose the degree to which the policy provides coverage for the loss of your crypto assets.  In this regard, we note your disclosure in your Form 10-Q for the quarterly period ended March 31, 2023 that the bitcoin held in custody by Coinbase is not insured.  Also, in future filings, identify the percentage of your crypto assets that are held in hot wallets.  In this regard, we note your response that you hold "most" of your bitcoin in hot wallets.

  Response:  In future filings, the Company will amend its disclosure regarding insurance covering its bitcoin holdings to state that, while Coinbase maintains insurance coverage of such types and amounts as Coinbase asserts to be commercially reasonable for its custodial services provided under the Company’s custody agreement with Coinbase, including certain commercial crime insurance of limited aggregate principal amount which covers losses stemming from fraud, security breach or hack, and asset theft, that insurance coverage may be insufficient to protect the Company against all losses of its bitcoin holdings held in custody with Coinbase, whether or not stemming from security breaches, cyberattacks and other types of unlawful activity, and to further state that the Company does not maintain its own insurance coverage of its bitcoin holdings.

  In future filings, the Company will also disclose the percentage of its bitcoin that are held in hot wallets as of the last day of the recently completed fiscal quarter.

  4.Refer to your response to comment 4.  Please disclose the material terms of your agreement with Genesis Custody Limited, including a description of Genesis Custody Limited's insurance and the degree to which those policies provide coverage for the loss of your crypto assets, and, if known, the geographic location where your crypto assets are held in cold wallets.  In addition, we note that the risk factor on page 16 of your 10-Q for the quarterly period ended December 31, 2022 notes that Genesis Global Holdco LLC declared bankruptcy but that you have no exposure to Genesis Global Holdco. In future filings, please expand this risk factor to state that you have a custody agreement with Genesis Custody Limited.

  Response:  The Company at no time had more than 0.01777 bitcoin held in custody with Genesis Custody Limited (“Genesis”), which was the result of one test transaction.  In June 2023, Genesis notified the Company that it would no longer provide custody services as of August 6, 2023.  The Company did not transfer any additional amounts after the initial test amount, and prior to August 6,2023, the Company transferred the 0.01777 bitcoin balance to its Coinbase account.  Accordingly, the Company does not currently have any plan to further utilize other custodial services.  If that changes, the Company will provide disclosure regarding the custodial agreement and applicable insurance coverage, consistent with the disclosure regarding Coinbase’s current custodial services.  For security reasons, Genesis did not disclose the geographic location of its cold storage wallet to its customers and we expect that other custodians are likely to take a similar position.

  Note 2. Summary of Significant Accounting Policies Revenue Recognition, page F-11

  5.We acknowledge your responses to comments 7 and 8. Please respond to the following:

  •You told us that you record your share of the bitcoins receivable by the mining pool operator upon the close of the reporting date at midnight UTC.  Clarify for us in what period you recognize revenue for each day's mining activity and how you perform your revenue cutoff for each quarterly reporting period.

  Response:  The Company recognizes revenue on each day, which includes each quarterly cutoff period, at midnight Coordinated Universal Time (UTC) for that day.   As an example, the bitcoin revenue for June 30, 2023 (the quarterly cutoff for the Company's third fiscal quarter), had a cut-off time of 12:00 am UTC, which was 8:00 pm Eastern Standard Time.   All processing provided to the Pool Operator after 8:00 pm Eastern Standard Time (12:00 am UTC), was included in bitcoin revenue for the next business day, July 1, 2023, which is the first day of the Company's fourth fiscal quarter.  The revenue was therefore recognized in the Company's fourth fiscal quarter.  The Company does not record the bitcoin earned during the 4-hour period between 8:00 pm and midnight Eastern Standard Time until the following period and in this example would be recorded on July 1, 2023.  The 4-hour accrual amount is deemed immaterial when considering the approach consistently applied by the Company throughout all reporting periods.

  •You gave us Foundry USA Pool Service Agreements in your last two responses.  Tell us where the promises and related performance obligations are described in the agreements. If these items are contained in another agreement, provide us a copy of those agreements/terms.

  Response:  The Company can confirm that the Foundry USA Pool Services Agreement previously provided to the Staff with our response letters includes the full agreement  that the Company has with regards to the relationship with the pool operator.   We can further inform the Staff that we have received updated Foundry USA Pool Terms and Conditions as of August 28, 2023 (see Exhibit A for updated Terms and Conditions and Foundry USA Pool's payout methodology).  As described in the notification from Foundry, "these changes were mostly made to more accurately reflect our existing practices of managing and providing our Pool services to users".  This agreement is provided as an Exhibit to this letter.

  The promises and the performance obligation is implicit in the agreement with the calculation of the Full-Pay-Per Share (“FPPS”) payout.  Foundry is a U.S.-based, institutional-grade mining pool  that takes on the risks associated with mining and provides stable payouts to miners through their FPPS payout mode.  The Company's interaction with the mining pool operator Foundry has been consistent throughout the relationship, in that the Company provides computing power to the mining pool operator and we are compensated for such performance.   ASC 606-10-25-16 states that "a contract with a customer also may include promises that are implied by an entity’s customary business practices, published policies, or specific statements if, at the time of entering into the contract, those promises create a reasonable expectation of the customer that the entity will transfer a good or service to the customer."

  •Substantiate for us why the contribution of hash rate is your performance obligation and how the Foundry USA Pool Service Agreement identifies your promises and related performance obligations.  In your response, address the following:

  ▪Tell us what a "Share" is in the context of your poll payout structure (FPPS);

  Response:  The term "share" from the Foundry USA Pool's payout methodology was clarified in the updated Foundry USA Pool's Payout Methodology [attached as an Exhibit to this letter] to represent an Accepted Share.   An Accepted Share is defined as "a share that has a difficulty that meets or exceeds the share difficulty and is neither stale nor rejected.  These "Accepted Shares" are included as the numerator of the Pay-Per-Share ("PPS") calculation.  Share Difficulty is defined in the agreement as "difficulty required for our pool to accept a share."  This difficulty is set on a per worker basis, to ensure that the worker sends shares at a target rate.  The Accepted Share can be expressed as computing power (in the form of hashrate) contributed by the Company and accepted by the pool operator.   As described in the payout methodology, the Share Difficulty divided by the network difficulty is multiplied by the Block Subsidy, which is defined as “part of the BTC reward for mining a block coming from newly issued BTC; not including the block transaction fees.”

  ▪Tell us your consideration for treating each nonce you are assigned as a performance obligation or whether the range of all nonces for an individual block is a separate performance obligation;

  Response:  The Company has a single performance obligation to its customers to provide computing power services (in the form of hashrate) to the mining pool operator customer. The performance obligation of computing power services is fulfilled over time daily between midnight-to-midnight UTC, as opposed to a point in time, since the Company provides computing power within the meaning of ASC 606-10-25-27 through 25-29.

  The nonce is the value that mining pool operators are trying to solve for and is used to validate the information contained within a block. The mining program performed through computing power generates a random number, appends it to the hash of the current header, rehashes the value, and compares this to the target hash. If the resulting hash value meets the requirements, the mining pool operator has created a solution and is awarded the block. If the value doesn't match the target, the nonce is increased by one, and the process starts again. This continues until the value matches the target and a block is awarded. Thus, a successful block is based on a series of nonces.

  ▪Tell us how and when you report your work performed to the pool operator. In this regard, explain whether you report each nonce completed or only report when all nonces assigned are completed or at some point in between.

  Response:  The computing power contributed by the Company is directed through the Pool Operator servers and is recorded directly by Foundry without requiring a separate communication from the Company.

  ▪As you determined that your single performance obligation to provide computing power services (hashrate) is recognized over time under ASC 606-10-25-27a and 25-27b, please tell us how you considered if 25-27c was met.

  Response:  The Company confirms that ASC 606-10-25-27c was considered and met.   The revenue recognition guidance in 25-27c provides that revenue can be recognized over time (satisfying the performance obligation over time) if "the entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date."  Both parts of this criterion are met since the computing power contributed to the Pool Operator would not create an asset that the Company has control over as it is consumed simultaneously by Foundry.  Even

  if the Company stopped providing service at 8:00 am UTC, it would still get paid based on computing power provided from midnight UTC to 8:00 am UTC of that day.

  oTell us how you have insight into whether the amount of bitcoin to be received from the pool operator is the appropriate amount given the variable nature of the computing power (and/o