DEF 14A of Cleanspark, Inc., Jan 22, 2025

DEF 14A of Cleanspark, Inc.

Filed Jan 22, 2025 · FY20240000950170-25-007763

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS NOMINATION OF DIRECTORS The Nominations and Corporate Governance Committee of the Board (the “Nominating Committee”) is charged with making recommendations to the Board regarding qualified candidates to serve as members of the Board. The Nominating Committee’s goal is to assemble a board of directors with the skills and characteristics that, taken as a whole, will assure a strong board of directors with experience and expertise in all aspects of corporate governance. Accordingly, the Nominating Committee believes that candidates for director should have certain minimum qualifications, including personal integrity, strength of character, an inquiring and independent mind, practical wisdom, and mature judgment. In evaluating director nominees, the Nominating Committee considers the following factors: (1) The appropriate size of the Board; (2) The Company’s needs with respect to the particular talents and experience of its directors; and (3) The knowledge, skills, and experience of nominees, including experience in technology, business, finance, Bitcoin, digital assets, administration, and/or public service. Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating Committee may also consider such other factors as it deems to be in the Company’s and its stockholders’ best interests, including the independence requirements for board and committee membership under The Nasdaq Capital Market (“Nasdaq”) listing standards, diversity (though the Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees), and the requirements for at least one member of the Board to meet the criteria for an “audit committee financial expert,” as defined by SEC rules. The Nominating Committee also believes it is appropriate for our Chief Executive Officer to serve on the Board. The Nominating Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, but the Nominating Committee at all times seeks to balance the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not wish to continue in service, the Nominating Committee’s policy is to not re-nominate that member for reelection. The Nominating Committee identifies the desired skills and experience of a new nominee and then uses its network and external resources to solicit and compile a list of eligible candidates. We do not have a formal policy concerning stockholder recommendations of nominees for director to the Nominating Committee as, to date, we have not received any recommendations from stockholders requesting the Nominating Committee to consider a candidate for inclusion among the Nominating Committee’s slate of nominees in our proxy statement. The absence of such a policy does not mean, however, that such recommendations will not be considered. Stockholders wishing to recommend a candidate may do so by sending a written notice to the Nominating Committee, Attn: Chairman, CleanSpark, Inc., 10624 S. Eastern Ave., Suite A-638, Henderson, Nevada 89052, naming the proposed candidate and providing detailed biographical and contact information for such proposed candidate. See “Stockholders’ Proposals for the 2026 Annual Meeting” for further information on submitting written notices. There are no arrangements or understandings between any of our directors, nominees for directors, or officers and any other person pursuant to which any director, nominee for director, or officer was or is to be selected as a director, nominee, or officer, as applicable. There currently are no legal proceedings, and during the past ten years there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors or director nominees. There are no material proceedings to which any director, officer, affiliate, or owner of record or beneficially of more than 5% of any class of voting securities of the Company, or any associates of any such persons, is a party adverse to the Company or any of our subsidiaries, and none of such persons has a material interest adverse to the Company or any of its subsidiaries. Other than as disclosed below, during the last five years, none of our directors held any other directorships in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any company subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940, as amended. The Nominating Committee has recommended, and the Board has nominated, Zachary K. Bradford, S. Matthew Schultz, Larry McNeill, Dr. Thomas L. Wood, Roger P. Beynon, and Amanda Cavaleri as nominees for election as members of our Board at the 2025 Annual Meeting for a period of one year or until each such director’s respective successor is elected and qualified or until such director’s earlier death, resignation, or removal. Each of the nominees is currently a director of the Company. At the 2025 Annual Meeting, six directors will be elected to the Board. INFORMATION REGARDING DIRECTORS

  2. ELECTION OF DIRECTORS

    | Zachary K. Bradford | Zachary K. Bradford is the co-founder, CEO, and president of CleanSpark, a publicly traded bitcoin mining company known as America’s Bitcoin Miner®. Since co-founding CleanSpark in March 2014, Zach has served as a director and took over as CEO since October 2019, leading the company through significant growth milestones, including up-listing to Nasdaq, raising over $2 billion in capital, and the execution of a multistate expansion strategy that included an array of strategic acquisitions. CleanSpark now operates data centers across the United States, with locations in Georgia, Mississippi, Tennessee, Wyoming, and Nevada and a total operational capacity of over 750 megawatts (“MW”). The Company represents more than 5% of the global bitcoin blockchain network hashrate and employs over 300 people. He earned a master’s degree in accounting from Southern Utah University. His leadership has made CleanSpark one of the largest and most efficient bitcoin mining companies in North America. | | | We believe that Mr. Bradford is qualified to serve on our Board of Directors because of his service as our Chief Executive Officer, as well as his experience and knowledge in public company reporting and accounting, Bitcoin infrastructure economics, including the ASIC bitcoin miner and energy markets, and mergers and acquisitions. | | S. Matthew Schultz | S. Matthew Schultz is the co-founder, executive chairman and former CEO of CleanSpark. Since co-founding the Company in March 2014, he served as a director and CEO until October 2019, when he transitioned to Executive Chairman. During his tenure as CEO, Matt led CleanSpark as an alternative energy generator focused on converting biomass into energy using CleanSpark’s patented gasifier technology. He then led the expansion of CleanSpark in the renewable energy sector, including the development and deployment of critical software that supported distributed energy systems, including mission critical infrastructure and demand response programs. These systems were deployed in support of commercial and government programs, most notably at Camp Pendleton. In partnership with CleanSpark’s management team, Matt has assisted in raising over $2 billion dollars in capital facilitating the pivot to bitcoin mining. His leadership has been instrumental in making CleanSpark one of the most recognizable bitcoin mining companies in North America. | | | We believe that Mr. Schultz is qualified to serve on our Board of Directors because of his experience and knowledge in public company reporting and finance, the energy sector, and market development. |

  3. ELECTION OF DIRECTORS

    | Larry McNeill | Larry McNeill has served as a director of CleanSpark since January 2015. In September 2017, Mr. McNeill accepted the position of Chairman of the Board, which he held until October 2019. Mr. McNeill continued as an independent director and Chairman of the Compensation and Nominations and Corporate Governance Committees through September 2024. Since October 2024, Mr. McNeill has served as CleanSpark’s lead independent director. Mr. McNeill’s diverse business background includes roles in real estate, finance, research, legal, management, and business strategies. He was Director of the Consumer, Sales, and Store Location research departments of Safeway Grocery Stores, Inc. (“Safeway”), where he was responsible for the expansion of Safeway in Europe, Australia, and Canada from 1970 to 1975. Prior to that, Mr. McNeill served as Director of Market Research for A&P, where he was responsible for the company’s expansion into Saudi Arabia. He was an executive officer of Smith’s Food and Drug Stores for 17 years, most recently as Senior Vice President of Corporate Development. Mr. McNeill retired from Smith’s Food and Drug Stores in 1996 after its merger with Fred Meyer was completed. Mr. McNeill has a bachelor’s degree in business administration, economics, and Russian language from Minnesota State University, a master’s degree in business administration from Armstrong University, and has completed course work towards his PhD in business management. | | | We believe that Mr. McNeill is qualified to serve on our Board of Directors because of his extensive experience and knowledge in business management and finance, including market research, real estate, strategic advisory services, and business law. | | Dr. Thomas L. Wood | Dr. Thomas L. Wood has been a Director of CleanSpark since October 2019 and has served as the Chairman of the Compensation and Nominations and Corporate Governance Committees since October 2024. He has over 39 years of experience in planning and operations, policy development and implementation, construction management, defense acquisition, budgeting and programming, and large project management. Dr. Wood previously served in the U.S. Navy from 1985 to 2006, rising to the role of Deputy Operations for the Navy’s Pacific Engineering Command, where he oversaw the execution of nearly $1 billion annually in construction and services contracts through nine field offices across the Pacific. After leaving the Navy, Dr. Wood served as a Subject Matter Expert (SME) supporting the U.S. Pacific Command (USPACOM) Joint Interagency Coordination Group (JIACG) as a Senior Military Analyst and continued as a civil servant in senior roles thereafter, including Director, Commander’s Action Group, Joint Interagency Task Force West, Deputy Director for Strategic Forces and Policy, Submarine Force, U.S. Pacific Fleet, and Deputy Director of Operations, U.S. Pacific Fleet. Dr. Wood holds a bachelor’s degree in civil engineering from Union College, a master’s degree in civil engineering from the University of Maryland, College Park, and a doctor of business administration degree from Argosy University, Honolulu. He is a licensed Professional Engineer. Dr. Wood is a member of the board of advisors of 28 Research and is a co-inventor on two issued U.S. Patents. | | | We believe that Dr. Wood is qualified to serve on our Board of Directors because of his experience and knowledge in engineering, strategic planning, operations, and logistics, derived in part from his military background. |

  4. ELECTION OF DIRECTORS

    | Roger P. Beynon | Roger P. Beynon has been a Director of CleanSpark since October 2019. He is the owner of Beynon & Associates, a public accounting firm that has been in operation since 1984 where he provides accounting and tax services to businesses. Mr. Beynon is a Certified Public Accountant (CPA) and Certified Fraud Examiner (CFE) and is a past president of the Utah Association of CPAs. He was also chairman of the board of directors of Transwest Credit Union until January 2025, when that entity merged with Utah Community Credit Union on January 1, 2025. Mr. Beynon holds a bachelor’s degree in accounting with a minor in banking and finance from Weber State University. | | | We believe that Mr. Beynon is qualified to serve on our Board of Directors because of his experience and knowledge in leading a public company reporting and accounting firm, board management, and finance. | | Amanda Cavaleri | Amanda Cavaleri has been a director of CleanSpark since December 2022. Since September 2019, she has been the managing director of a global advisory firm within the Bitcoin ecosystem for clients ranging from global hedge and venture funds to financial services and mining. From October 2021 to November 2024, she was the Chief Executive Officer of a Wyoming-based company that is developing bitcoin mining sites leveraging stranded energy. In May 2021, she co-founded a structured equity fund management company, focusing on emerging markets. Ms. Cavaleri was Chief Marketing Officer and Vice President of Business Development of a privacy platform from August 2018 to March 2019. She was the managing director of an emerging technology advisory firm from January 2013 to December 2018. She is a former Innovation Fellow with AARP (2016-2017) and was a Thought Leader with Carnegie Mellon University & UPMC’s Quality of Life Technology Center in (2014-2017). She received her Master of Science in Technology Commercialization from the University of Texas at Austin's McCombs School of Business and a Bachelor of Science degree from Regis University. Ms. Cavaleri is a member of the board of advisors of the Bitcoin Today Coalition, a nonprofit (c)(4) increasing Bitcoin literacy among America’s legislators, regulators, and other policymakers and a member of the board of directors of the Jackson Hole International Film Festival. She coauthored Bitcoin and the American Dream: The New Monetary Technology Transcending our Political Divide (2021). | | | We believe that Ms. Cavaleri is qualified to serve on our Board of Directors because of her experience and knowledge in alternative investments and emerging technologies, the Bitcoin mining industry, and the policy and regulatory arenas. |

  5. ELECTION OF DIRECTORS

    | NAME | AGE | POSITION | | Zachary K. Bradford | 38 | Chief Executive Officer, President, and Director | | S. Matthew Schultz | 55 | Executive Chairman of the Board | | Larry McNeill | 83 | Lead Independent Director | | Dr. Thomas L. Wood | 59 | Director | | Roger P. Beynon | 78 | Director | | Amanda Cavaleri | 36 | Director |

  6. ELECTION OF DIRECTORS

    Directors are elected by a plurality of the votes cast at the Meeting. This means that the nominees receiving the highest number of affirmative (“FOR”) votes (among votes properly cast virtually or by proxy) will be elected as directors. In other words, because there are no other nominees for election as directors other than the persons named in the enclosed proxy card, and assuming each of those persons receives at least one vote, all such directors will be re-elected to our Board, provided that a quorum is present at the Meeting. Shares represented by executed proxies will be voted for which no contrary instruction is given, if authority to do so is not withheld, “FOR” the election of each of the nominees named above. Only votes “FOR” will affect the outcome. Broker non-votes and withheld votes will have no effect on this proposal.

  7. ELECTION OF DIRECTORS

    | THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES UNDER PROPOSAL 1. |

  8. DIRECTOR COMPENSATION*

    DIRECTOR COMPENSATION*

  9. DIRECTOR COMPENSATION*

    | NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(2) | TOTAL ($) | | Larry McNeill | 120,000 | 200,000 | 320,000 | | Roger P. Beynon | 120,000 | 200,000 | 320,000 | | Dr. Thomas L. Wood | 120,000 | 200,000 | 320,000 | | Amanda Cavaleri | 120,000 | 200,000 | 320,000 |

  10. DIRECTOR COMPENSATION*

    * Columns (d), (e), (f), and (g) required under Item 402(k) of Regulation S-K have been omitted from this table as they are not applicable. (1) Includes $120,000 annual cash retainers for each Board member paid $10,000 monthly. (2) Represents the fair value of Restricted Stock Units (“RSUs”) issued in accordance with the CleanSpark, Inc. 2017 Incentive Plan, dated as of June 19, 2017 (as amended, restated, or otherwise modified from time to time, the “2017 Incentive Plan”), and is computed in accordance with Accounting Standards Codification 718, Compensation—Stock Compensation, or ASC 718. The RSUs represented here vested 25% per each quarter period during fiscal year 2024. None of these were unvested and outstanding as of September 30, 2024.

  11. COMPENSATION DISCUSSION AND ANALYSIS

    An executive’s base salary is foundational to a comprehensive compensation strategy. Base salary provides financial stability and security, allowing executives to focus on strategic leadership and operational excellence. By offering a competitive base salary, a company can attract and retain top-tier talent, which is essential for formulating and executing strategies that drive corporate growth and sustainability. We compensate our executives commensurate with their performance relative to peers, and we benchmark compensation, including base salary, to other peers annually. Non-Equity Incentive Compensation and Discretionary Annual Cash Bonuses Non-equity incentive compensation and discretionary annual cash bonuses are awarded based on the achievement of specific performance criteria, including but not limited to (i) maintaining or enhancing facility and mining uptime, (ii) improving fleet energy efficiency, (iii) achieving hashrate targets, (iv) achieving growth targets, (v) achieving identified growth targets while adhering to financial and time constraints, (vi) reaching targets i, ii, iii and iv while optimizing our cost structure, and (vii) other strategic targets or goals as may be set by the Compensation Committee, in discussion with the Board, from time to time. This model encourages strategic leadership by rewarding executives for formulating and executing strategies that drive corporate growth and position the Company and its stockholders for long-term success. The Compensation Committee believes that the non-equity incentive compensation plan and discretionary annual cash bonuses align executive officer efforts directly with the Company’s and its stockholders’ strategic goals, ensuring they focus not only on managing current operations but also on future success. Additionally, these arrangements drive operational excellence by incentivizing improvements in efficiency, cost optimization, and productivity. This focus on efficiency is particularly relevant in bitcoin mining, where optimizing energy use directly impacts the costs of bitcoin production and the efficiency of the Company’s fleet, enhancing both profitability and corporate responsibility. Finally, non-equity incentives foster long-term commitment by tying significant financial rewards to the achievement of specific, impactful short- and long-term goals, thereby promoting sustained leadership and strategic continuity essential for corporate longevity and stability. When evaluating performance for the payment of non-equity compensation plan and discretionary bonuses, the Compensation Committee reviewed performance over fiscal year 2024. That evaluation included a comparison to prior year performance and current period performance as reported by competitors, including the following metrics: Target 1: Increase CleanSpark revenues. For fiscal year 2024, the Company posted revenue of approximately $379 million, a 125% increase over fiscal year 2023. Target 2: Increase hashrate. For fiscal year 2024, the Company surpassed 27 EH/s, more than 2.5 times the highest rate achieved in fiscal year 2023. In December 2024, the Company surpassed 37.5 EH/s, outperforming guidance, and raised capital to achieve 50 EH/s during the first half of fiscal year 2025. Target 3: Maintain a strong balance sheet and liquidity position. For fiscal year 2024, the Company ended with $431.7 million in liquid assets and $66.0 million in total debt, preparing the Company to achieve expansion targets set for fiscal year 2025. Target 4: Preserve or enhance gross margin, or enhance energy efficiency. The Company reported mining bitcoin at a 56% gross profit margin, representing an increase from fiscal year 2023 due to mining fleet efficiency improvements, enhanced energy pricing, increased bitcoin prices, and sustained economies of scale from growth. The Company also significantly improved its energy efficiency and achieved 19.05 joules per terahash in fiscal year 2024. Target 5: Increase bitcoin mining production. The Company reported 7,092 bitcoin mined during fiscal year 2024, net of mining pool fees, a 3% increase over the 6,903 bitcoin mined in fiscal year 2023. Target 6: Increase hashrate as a percentage of global hashrate. For fiscal year 2024, the Company increased its global hashrate market penetration from approximately 2.3% to 4.4%, putting the Company among the largest miners in the world. Long-Term Incentives Long-term incentives are provided to executives as equity compensation in the form of RSUs granted under the 2017 Incentive Plan. They are awarded and vest in two different ways–time and performance. Time-based vesting is designed to retain high-performing executives who remain in anticipation of future rewards and incentivize the executive award recipient to increase the Company’s stock price through continued, consistent performance. Time-based awards granted by the Company generally vest evenly over a three-year period following the grant date. Stock awards such as RSUs also fall subject to our Insider Trading Policy, which prohibits hedging and restricts any unauthorized trading on the margin or pledging of Company stock by the Company’s executives. Performance-based vesting is also designed to focus executive attention on targets that the Company believes are likely to drive stockholder value. The Company has deployed two types of performance-based awards. They include achieving 1) operational targets, which are tied to the achievement of specific growth goals related to the Company’s hashrate, and 2) market targets, which are tied to creating sustainable stock-price appreciation. OTHER COMPENSATION INFORMATION AND POLICIES Employment Agreements We have entered into employment agreements with all five of our NEOs. Please see “Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table” and “Potential Payments Upon Termination” beginning on page 36 of this Proxy Statement for specific information regarding the compensation payable to each NEO based on the terms of their respective employment agreements. 2017 Incentive Plan The 2017 Incentive Plan allows the Company to grant incentive stock options, non-qualified stock options, restricted stock, stock units, stock awards, stock appreciation rights, performance shares, and performance units. The incentive stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company at the date of the grant of the option. Non-qualified options may be granted to any person, including, but not limited to, employees, independent agents, consultants, and attorneys who the Company’s Board believes have contributed, or will contribute, to the success of the Company. Non-qualified options may be issued at option prices of less than fair market value on the date of grant, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code“), and may be exercisable for up to ten years from date of grant. The option vesting schedule for options granted is determined by the Board at the time of the grant. The 2017 Incentive Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the 2017 Incentive Plan. As of September 30, 2024, the number of securities issued under the 2017 Incentive Plan was:

  12. COMPENSATION DISCUSSION AND ANALYSIS

    Equity Grant Procedures The Compensation Committee is the primary body responsible for approving equity awards, with limited delegation to the CEO for non-executive personnel. All equity awards were made in accordance with the 2017 Incentive Plan, and no options were awarded to executive officers during the fiscal year ended September 30, 2024. When granting equity awards, the Compensation Committee considers the timing, pricing, and conditions to mitigate risks of stock price manipulation or conflicts of interest. The Compensation Committee historically has not issued options to NEOs during any period when material non-public information has not been disclosed. Compensation Recovery (Clawback) Policy The Board adopted our Executive Officer Incentive Compensation Recoupment (Clawback) Policy, effective November 30, 2023 (the “Clawback Policy”), in accordance with Rule 10D-1 of the Exchange Act and Nasdaq listing standards. The Clawback Policy applies to current and former covered executive officers of the Company and is administered by the Compensation Committee. In the event the Company is required to prepare an accounting restatement to correct material noncompliance with any financial reporting requirement under U.S. federal securities laws, including restatements that correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period, it is the Company’s policy to recover erroneously awarded incentive-based compensation received by its executive officers. The recovery of such compensation applies regardless of whether an executive officer engaged in misconduct or otherwise caused or contributed to the requirement for a restatement. As a result of our correction of errors in prior year financial statements, the Compensation Committee conducted a recovery analysis of incentive-based compensation received by our executive officers during the relevant period, as contemplated by Rule 10D-1 under the Exchange Act and in accordance with the Clawback Policy. Based on this analysis, no recovery of incentive-based compensation was required, as the financial statement adjustments did not impact the metrics used to determine incentive compensation during the relevant recovery period, and thus there was no erroneously awarded compensation. Insider Trading Policy Our Board has adopted an Insider Trading Policy. For more information about our Insider Trading Policy, please see “Insider Trading Policy” on page 24 of this Proxy Statement. Tax and Accounting Considerations Accounting Treatment Equity awards granted to employees and non-employee directors under the Company’s equity compensation plans are recognized in accordance with the guidance in Accounting Standards Codification (“ASC”) 718, “Compensation – Stock Compensation”. The Company recognizes compensation cost for stock-based awards over the vesting period, which is generally the service period of the award. Deductibility of Executive Compensation Section 162(m) of the Code generally limits the deductibility of compensation paid to our NEOs to $1 million per year. While we consider the deductibility of compensation as one factor in our overall compensation program design, the Compensation Committee retains the flexibility to provide compensation that exceeds this limit if it determines such amounts are necessary to achieve our compensation objectives. As a result, certain components of our executive compensation program, including base salary and time-vesting equity awards, are not fully deductible under Section 162(m). Taxation of Parachute Payments and Deferred Compensation The Company has no obligation to provide any NEO with a “gross-up” or other reimbursement payment for any tax liability that they might owe as a result of the application of Section 280G, 4999, or 409A of the Code. The Company has structured its compensation arrangements with the intention of complying with or otherwise being exempt from the requirements of Section 409A of the Code. COMPENSATION SETTING PROCESS Role of the Board of Directors and the Compensation Committee The Compensation Committee maintains a compensation philosophy which outlines strategic goals in areas such as operating efficiency, financial transparency, and corporate culture. The Compensation Committee observed significant progress in achieving these goals in fiscal year 2024, particularly in operational efficiency, responsible financial growth, and industry leadership. In addition to the above strategic goals, the Committee structured compensation packages to attract and retain top talent. Role of Management Although the Board, through the Compensation Committee, retains primary authority over compensation decisions, it has delegated compensation decisions for non-executive employees to the CEO. Management provides updates and receives feedback from the Compensation Committee, in relation to its delegated authority over non-executive employee compensation. Independent Compensation Consultant The Compensation Committee engaged Compensia to provide advice on executive compensation matters, including competitive market analyses, pay-for-performance alignment, and incentive plan design. Compensia did not provide any other services to the company in fiscal year 2024. The Compensation Committee has determined that Compensia is independent and that their work did not raise any conflicts of interest. Use of Comparative Market Data On advisement by Compensia, the Compensation Committee approved a peer group of similarly situated technology companies, of which ten engage in bitcoin mining and of which eight engage in ancillary services relating to bitcoin mining and/or have large bitcoin holdings. “SAY-ON-PAY” VOTE RESULTS At our 2021 Annual Meeting, our stockholders approved our proposal to hold advisory votes on executive compensation every two years. As such, our last Say-on-Pay vote occurred at the 2023 Annual Meeting, at which 84.1% of stockholder votes cast were in favor of our Say-on-Pay proposal. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis referred to above be included in this Proxy Statement.

  13. SUMMARY COMPENSATION TABLE*

    SUMMARY COMPENSATION TABLE*

  14. SUMMARY COMPENSATION TABLE*

    | NAME AND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS(1) ($) | STOCK AWARDS(2) ($) | OPTION AWARDS(2) ($) | ALL OTHER COMPENSATION(3) ($) | TOTAL ($) | | Zachary K. Bradford CEO | 2024 | 800,000 | 8,886,666 | 5,000,001 | — | 754,915 | 15,441,582 | | | 2023 | 600,000 | 2,600,000 | 3,423,000 | — | 352,812 | 6,975,812 | | | 2022 | 500,000 | 350,000 | 25,378,854 | 605,445 | 204,593 | 27,038,892 | | Gary A. Vecchiarelli CFO | 2024 | 425,000 | 1,191,666 | 300,001 | — | 104,867 | 2,021,534 | | | 2023 | 400,000 | 400,000 | 2,282,000 | — | 49,233 | 3,131,233 | | | 2022 | 263,828 | 145,300 | 1,707,000 | — | — | 2,116,128 | | S. Matthew Schultz Executive Chairman | 2024 | 720,000 | 8,664,666 | 3,834,005 | — | 679,250 | 13,897,921 | | | 2023 | 540,000 | 2,340,000 | 3,080,700 | — | 318,038 | 6,278,738 | | | 2022 | 350,000 | 329,000 | 21,814,888 | 484,356 | 170,721 | 23,148,965 | | Scott E. Garrison COO(4) | 2024 | 299,091 | 485,000 | 2,153,998 | — | — | 2,938,089 | | Taylor Monnig CTO(4) | 2024 | 299,091 | 435,000 | 1,754,003 | — | — | 2,488,094 |

  15. SUMMARY COMPENSATION TABLE*

    * Columns (g) and (h) required under Item 402(c) of Regulation S-K have been omitted from this table as they are not applicable. (1) Amounts shown represent two tiers of bonuses: (i) discretionary bonuses as generally described under the executives’ respective employment agreements and earned based on goals approved by the Compensation Committee, and (ii) incentive-based non-equity incentive payments for meeting certain growth and performance targets under the specified performance measures, while meeting or exceeding efficiency targets. (2) Amounts shown represent the aggregate grant date fair value, as computed in accordance with ASC Topic 718. For a discussion of the assumptions made in the valuations reflected in these columns, see Note 14 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. (3) Amounts shown include compensation paid in bitcoin in accordance with the executives’ respective employment agreements and certain taxes paid by the Company on behalf of the executives in accordance with the executives’ employment agreements. The value included in the table represents the bitcoin price on the date of the issuance of the bitcoin. (4) Mr. Garrison and Mr. Monnig became NEOs on May 7, 2024 and were not NEOs during the fiscal years ended September 30, 2023 and 2022. The compensation earned in 2024 relates to service both before and after the May 7, 2024 appointment at NEOs. Grants of Plan-based awards The following table summarizes grants of plan-based awards granted to our NEOs during the fiscal year ended September 30, 2024. This information supplements the information about these awards set forth in the foregoing Summary Compensation Table.

  16. Grants of Plan-based awards*

    Grants of Plan-based awards*

  17. Grants of Plan-based awards*

    | | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK | GRANT DATE FAIR VALUE OF STOCK AND OPTION | | NAME | GRANT DATE | TYPE OF AWARD | OR UNITS (#) | AWARDS ($) | | Zachary K. Bradford | 9/30/2024(1) | RSU | 535,332 | 5,000,001 | | Gary A. Vecchiarelli | 9/30/2024(1) | RSU | 32,120 | 300,001 | | S. Matthew Schultz | 9/30/2024(1) | RSU | 410,493 | 3,834,005 | | Scott E. Garrison | 9/30/2024(1) | RSU | 53,533 | 499,998 | | | 5/07/2024(2) | RSU | 100,000 | 1,654,000 | | Taylor Monnig | 9/30/2024(1) | RSU | 10,707 | 100,003 | | | 5/07/2024(2) | RSU | 100,000 | 1,654,000 |

  18. Grants of Plan-based awards*

    * Columns (c), (d), (e), (f), (g), (h), (j), and (k) required under Item 402(d) of Regulation S-K have been omitted from this table as they are not applicable. (1) Time-based RSU awards granted on September 30, 2024, with 40% of the RSUs vesting immediately, and the remainder vesting in twelve equal quarterly installments beginning on February 13, 2025 and continuing quarterly thereafter on May 13, 2025, August 13, 2025, December 3, 2025, February 13, 2026, May 13, 2026, August 13, 2026, December 3, 2026, February 12, 2027, May 13, 2027, August 13, 2027 and December 3, 2027, subject to continued service to the Company through each vesting date. These RSUs were deemed under ASC 718 to have a fair value of $9.34 per RSU. (2) Time-based RSU awards granted on May 7, 2024, vesting in three equal installments on September 30, 2024, September 30, 2025, and September 30, 2026, subject to continued service to the Company through each vesting date. These RSUs were deemed under ASC 718 to have a fair value of $16.54 per RSU on the date of grant. NARRATIVE DISCLOSURE TO THE SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE Each NEO has an employment agreement that generally provides for a base salary, a discretionary bonus (often contingent on performance metrics or operational targets), and equity awards (a mix of performance-based and time-based restricted stock units or options). In some cases, NEOs also receive monthly bitcoin payments, which terminate automatically if the Company ceases mining bitcoin. Performance-based equity awards typically vest upon meeting certain milestones, while time-based awards vest in installments over defined periods. In addition, certain NEOs have signing or retention bonuses (repayable if the executive resigns within a specified timeframe), and their salary and bonus levels may be increased by amendment to reflect Company objectives or performance achievements. For the year ended September 30, 2024, pursuant to their employment agreements, Mr. Bradford earned 14.2 bitcoin, Mr. Vecchiarelli earned 2.0 bitcoin, and Mr. Schultz earned 12.96 bitcoin, with the fair value of the awards included in “All Other Compensation” of the Summary Compensation Table. Further details on the amounts paid, the fair value of equity awards, and vesting schedules are set forth in the Grants of Plan-Based Awards table. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END On June 19, 2017, our Board of Directors adopted the 2017 Incentive Plan. The purpose of the 2017 Incentive Plan is to attract and retain the best available personnel for positions of substantial responsibility with us, to provide additional incentive to employees, directors, and consultants, and to promote our success. The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of September 30, 2024.

  19. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END*

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END*

  20. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END*

    | | OPTION AWARDS | | | | STOCK AWARDS | | | NAME | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXCERCISABLE | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | MARKET VALUE SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) | | Zachary K. Bradford | 30,000 | — | 20.48 | 11/7/2024 | — | — | | | 500,000 | — | 23.00 | 4/15/2026 | — | — | | | — | — | — | — | 450,000(1) | 4,203,000 | | | — | — | — | — | 321,199(3) | 2,999,999 | | Gary A. Vecchiarelli | — | — | — | — | 40,000(1) | 373,600 | | | — | — | — | — | 19,272(3) | 180,000 | | S. Matthew Schultz | 24,000 | — | 20.48 | 11/7/2024 | — | — | | | 400,000 | — | 23.00 | 4/15/2026 | — | — | | | — | — | — | — | 405,000(1) | 3,782,700 | | | — | — | — | — | 246,296(3) | 2,300,405 | | Scott E. Garrison | 4,861 | 15,278 | 6.00 | 7/6/2033 | — | — | | | 45,000 | — | 15.69 | 5/14/2031 | — | — | | | — | — | — | — | 66,700(2) | 622,978 | | | — | — | — | — | 32,120(3) | 300,001 | | Taylor Monnig | 10,000 | 5,000 | 5.98 | 8/10/2032 | — | — | | | 9,722 | 15,278 | 6.00 | 7/6/2033 | — | — | | | — | — | — | — | 66,700(2) | 622,978 | | | — | — | — | — | 6,424(3) | 60,000 |

  21. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END*

    * Columns (d), (i), and (j) required under Item 402(f) of Regulation S-K have been omitted from this table as they are not applicable. (1) RSU awards granted on September 12, 2022 that are subject to a three-year vesting period of three annual installments beginning with the grant date. (2) RSU awards granted on May 7, 2024 that are subject to a three-year vesting period of three annual installments beginning with September 30, 2024. (3) RSU awards granted on September 30, 2024, of which 40% vested immediately and the remainder vests in twelve equal quarterly installments beginning with February 13, 2025 and continuing quarterly thereafter. Stock Option Exercises and stock vested The following table summarizes exercises of stock options and the vesting of stock held by our NEOs during the fiscal year ended September 30, 2024.

  22. Option Exercises and stock vested*

    Option Exercises and stock vested*

  23. Option Exercises and stock vested*

    | | STOCK AWARDS | | | NAME | AGGREGATE NUMBER OF SHARES ACQUIRED ON VESTING (#) | AGGREGATE VALUE REALIZED ON VESTING ($)(1) | | Zachary K. Bradford | 1,660,565 | 20,892,946 | | Gary A. Vecchiarelli | 661,419 | 10,067,370 | | S. Matthew Schultz | 1,465,984 | 18,537,241 | | Scott E. Garrison | 224,713 | 3,214,024 | | Taylor Monnig | 247,583 | 3,690,025 |

  24. Option Exercises and stock vested*

    * Columns (b) and (c) required under Item 402(g) of Regulation S-K have been omitted from this table as they are not applicable. (1) In accordance with SEC rules, the value realized is based on the closing price of our Common Stock on the applicable vesting dates. pension benefits table We do not maintain or make contributions to a defined benefit plan for any of our NEOs. nonqualified deferred compensaton table We do not maintain a nonqualified deferred compensation plan for any of our NEOs. PEO PAY RATIO We are required under Item 402(u) of Regulation S-K to calculate and disclose our “PEO pay ratio”. We conduct our business within the continental United States, and as of September 30, 2024, we had 270 employees. For 2024, the median annual total compensation of all employees of the Company, excluding our PEO, was $80,510, and the annual total compensation of our PEO was $15,440,147, as reported in the “Summary Compensation Table” on page 33 of this Proxy Statement. Accordingly, the ratio of our PEO’s annual total compensation to the median annual compensation of all employees (excluding the PEO) was 192:1. We used total compensation to determine the median employee as of September 30, 2024, which includes (i) annual base salary plus annual incentives paid to salaried employees and (ii) hourly salary rate times annual hours plus additional adjustments for annual incentives, shift differentials, actual overtime rates, and other cash allowances paid to hourly employees and any equity granted to eligible employees. The ratio and annual total compensation amount of the median employee are reasonable estimates that have been calculated using methodologies and assumptions permitted by SEC rules. The Company notes that its ratio and annual total compensation amount may not be directly comparable to those of other companies because the methodologies and assumptions used to identify the median employee may vary significantly among companies. POTENTIAL PAYMENTS UPON TERMINATION The severance terms for Messrs. Bradford, Vecchiarelli, Schultz, Garrison, and Monnig are reflected in their respective employment contracts. Below are summary tables of potential severance payments and benefits for each of our NEOs under various termination scenarios. The NEOs have been defined in three categories, based on the underlying employment agreements, with Messrs. Bradford and Schultz being Category 1, Mr. Vecchiarelli as Category 2, and Messrs. Garrison and Monnig as Category 3. Receipt of the potential severance payments and benefits listed below, as applicable, may be subject to the signing by such officer of a general release of all claims against the Company in a form and manner satisfactory to the Company, and after the expiration of any revocation rights under that general release, and subject to such officer’s compliance with post-termination obligations and any restrictive covenants upon termination. This information should be read in conjunction with the specific terms of each NEO’s employment agreement, which govern all final severance amounts and conditions.

  25. Option Exercises and stock vested*

    | TERMINATION EVENT | SALARY | BONUS | BENEFITS & EQUITY | | Without Cause | 12 months’ base salary, plus continued benefits | 100% of the bonus paid in the prior 6 months, payable on the same schedule as salary | All unvested awards immediately vest and become exercisable | | For Cause | 6 months’ base salary, plus continued benefits | No additional bonus beyond any accrued (if any) | Generally, forfeits unvested awards | | Disability or Death | No additional salary-based severance (only accrued salary) | Any unpaid, earned bonus | All unvested awards immediately vest |