Using a Dawnstone Anvil, the Clockwork Battleaxe can be upgraded with several upgrades. First a Motive Core must be attached to allow the generation of heat. Heat is acquired through normal use of the item, and once the item has reached maximum heat, it can be upgraded in an Inferno Forge to gain a level.
For each heat level on the item, an upgrade can be attached at a Dawnstone Anvil:
And if a Caster Orb is attached: