CLEANSPARK INC

Capital Stewardship

We define Capital Stewardship as the strategic CapEx we make in our infrastructure, mining servers and other long‑term assets. CapEx is used as a financial metric for executive compensation due to its direct impact on the operational and financial performance of the Company. This metric is particularly important for the bitcoin mining and data center industry because of its capital-intensive nature. CapEx decisions influence operating efficiency by determining the quality and efficiency of our operating assets and infrastructure, which affects energy efficiency (joules per terahash), uptime, and average power cost. Strategic CapEx investments in energy-efficient technologies, systems, and processes for our operations directly contributes to optimizing operational revenues and costs per exahash and increasing gross operating margins, which is crucial for maintaining a path to profitability. Sound financial management is also a reflection on CapEx decision making, as it involves significant financial commitments and requires meticulous planning and execution. Responsible growth, indicated by a balanced use of capital and sound debt management, is directly impacted by how executives manage and execute their CapEx plans. Executive actions ensure investments are made judiciously and aligned with short and long-term Company goals. Finally, CapEx decisions affect corporate culture and industry leadership by influencing workplace conditions and the Company’s technological advancement. We believe that wise CapEx decisions enhance employee satisfaction and safety and establish the Company as a leader in performance, cost efficiency, and innovation. By tying executive compensation to CapEx management, companies ensure that executives are incentivized to make decisions that not only align with immediate financial goals but also foster long-term growth, sustainability, and industry leadership.

Cash Flow

Cash flow is used as a metric to determine executive compensation because it provides a clear and tangible measure of a company’s financial health and operational efficiency. By using cash flow as a metric, the Company aligns executive compensation with the ability to generate sustainable and usable funds, which is crucial for long-term business success. It incentivizes executives to focus on optimizing operations, managing working capital effectively, and making strategic decisions that enhance the Company’s liquidity and financial stability. This focus on cash flow encourages prudent financial management, emphasizing not just profitability but also the efficient use of resources and assets to generate positive outcomes, which are vital for stockholder value creation and the overall financial health of the Company.

Other Performance Measures Linked to Financial Performance Measures

The Compensation Committee evaluated the challenges and opportunities of creating an appropriate compensation package for the Company’s executives that acknowledges the real-world impacts of bitcoin price volatility, scarcity and cost volatility of mining assets, volatility in energy prices, and a highly competitive market. The Compensation Committee selected the following metrics to drive compensation decisions and bonuses for both incentive-based compensation and discretionary bonus compensation:

Financial Transparency, providing clear and accurate financial information improves corporate governance and accountability, thereby reducing risks and boosting earnings and return on equity.

Financial Performance, as measured by:

a.

Responsible growth with a desire for low debt during high-interest periods;

b.

Sound budget development and management to targets;

c.

Speed of return on capital investments;

d.

Total capital cost invested per exahash relative to peers, including infrastructure, equipment and ASIC miners;

e.

Operating cost per exahash relative to peers; and

f.

Path to profitability with focused effort on post-halving net positive revenue. This measure is directly aligned with a balanced approach to revenues, earnings, capital expenditures, cash flow, and return on equity.

Corporate Culture, as measured by employee compensation, workplace safety, employee retention and employee satisfaction. This measure reduces operational risks and enhances performance.