CleanSpark experienced a significant financial setback in its fiscal second quarter, reporting a net loss of $378.3 million, more than double the $138.8 million loss from the same quarter last year. The primary factor behind this loss was a steep decline in Bitcoin’s market price, which impacted the valuation of the company’s Bitcoin holdings.

The company disclosed that $224.1 million of the loss stemmed from the fair value adjustment of its Bitcoin assets, representing nearly 60% of the total quarterly deficit. At quarter’s end, CleanSpark held Bitcoin worth approximately $925.2 million. The net loss per basic share widened to $1.52 from $0.49 the previous year, while quarterly revenue declined to $136.4 million from $181.7 million.

Despite the negative impact of Bitcoin’s price drop, CleanSpark has bolstered its cryptocurrency portfolio, increasing Bitcoin holdings by 14% year-over-year. It also expanded its mining capacity, growing its average monthly hashrate by 18% compared to the previous year, underscoring its ongoing investment in mining operations.

In response to shifting market dynamics, CleanSpark is increasingly diversifying into artificial intelligence (AI) and high-performance computing (HPC). The firm has doubled its contracted power capacity year-over-year to 585 megawatts, approved by the Electric Reliability Council of Texas (ERCOT), and is progressing with site development in Sandersville, Georgia aimed at supporting AI workloads.

The company finished the quarter with $260.3 million in cash and total assets valued at $2.9 billion. However, its long-term debt surged, nearly tripling to $1.8 billion from $644.6 million six months earlier. This marks a substantial increase in financial leverage amid the company’s strategic pivot.

Following the earnings release, CleanSpark’s shares dropped significantly in after-hours trading, falling 9.51% to $12.94 after closing the day slightly up at $14.30.

CleanSpark’s financial challenges reflect a broader trend in the Bitcoin mining sector. Peers like MARA Holdings and TeraWulf also reported escalating losses linked to Bitcoin market volatility. MARA posted a $1.3 billion loss for the first quarter, with revenue declining 18%, while TeraWulf recorded a net loss of $427 million but showed progress in its AI-focused HPC business segment, which generated $21 million in revenue.