How Bitcoin Miner CleanSpark Keeps Building In The Bear Market
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With many bitcoin miners struggling to stay afloat, CleanSpark is poised to emerge from the bear market stronger than ever.
It’s no secret that the bitcoin bear market is bad right now. By some metrics, it’s one of the worst pullbacks in Bitcoin’s young history. And few aspects of the Bitcoin economy are as severely affected by the current market situation as miners. But bear markets are exactly when the winners in mining are separated from the losers: agile and smart teams build and survive while over-leveraged and unprepared teams find themselves in an unfavorable environment.
One company that has continued to grow, acquire and build through the bear market is CleanSpark, a publicly traded bitcoin mining company in Nevada. This article highlights some of the moves this team has made over the past several months, contextualized somewhat in the brutal state of the mining market, which makes CleanSpark’s design and execution even more impressive and significant.
Before proceeding, it is important to note that this article is for educational purposes only. The author compiled this information and analysis to be shared as market commentary, not as advice of any kind. The author also does not own shares of CleanSpark and has no other personal financial investments in the company.
Bitcoin Mining Bear Market
The price of Bitcoin is down about 70% from its record highs. The hash price – the dollar value of each unit of the hash rate – is quickly approaching all-time lows. Almost every week there is a new headline about lawsuits, bankruptcies and new mining bankruptcies. Miners are struggling to stay in business, let alone produce bitcoin. Almost no matter what kind of data one looks at, the current bear market is messy and not much fun.
Despite all this, the CleanSpark team continues to grow, buy and build, as explained in the next section. Shares of CleanSpark, priced in bitcoin, are still slightly above the start of the year, according to TradingView data, despite continued broader market turmoil — not bad for a bear market.
CleanSpark’s bear market is moving
Many mining companies act as “press release heroes” by announcing and planning for their growth, but often fail on schedule or at all. But since launching its first mining sector in December 2020, CleanSpark has 100 employees and an online hash rate of 3 exahashes (EH), and has tripled its hash rate in the last year alone.
CleanSpark has also been on a continuous buying spree for mining equipment, despite – or perhaps because of – deteriorating market conditions. The company bought 4,500 Antminer S19s last October and 2,597 more the following month. In June, it bought contracts for 1,800 Antminer S19 XP. In July, the company received 1,060 Whatsminer M30S. In August it bought 3,400 more Antminer S19s and in September 10,000 Antminer S19j Pros.
CleanSpark has also made new deals, partnerships and acquisitions nearly every month this year, including $35 million in new funding (April), a partnership with TMGcore (June), a co-location agreement with Coinmint (July), the acquisition of an 86 megawatt (MW) mining facility in Georgia ( August) and the acquisition of a turnkey mine site from Mawson (September).
And in the midst of all this growth, the company’s stable financial situation separated it from one of the lowest debt ratio throughout the public mining sector. Jaran Mellerud, mining analyst at Arcane Research, said about the company: “CleanSpark’s combination of quality and low valuation makes it one of the most interesting bitcoin mining stocks going forward.”
A brief history of CleanSpark
CleanSpark represents a unique type of mining company unlike most others in the bitcoin market today, namely an energy company that turned into a mining company. Founded in 1987 as a software and energy company, CleanSpark only started monitoring the mining industry in the last couple of years. According to CleanSpark CEO Matthew Schultz, the company worked in the mining sector throughout 2020 and saw a series of high-profile bitcoin investments from Square, Tesla and MicroStrategy as “further confirmation” of the industry’s legitimacy. And in early August, it completed its transition from energy to mining by selling its remaining energy assets “to focus entirely on bitcoin mining.”
This transition gives CleanSpark a unique perspective on the market and something of an advantage over other mining companies merging or partnering with the energy industry. For example, CleanSpark is well aware of the barriers to partnerships and negotiations between the two industries, as CEO Zach Bradford said on a mining panel during the Bitcoin 2022 conference in Miami.
“No one knows how to price that much power for a steady load,” Bradford said, referring to the hurdles miners face in negotiating contracts with utility companies.
The end of the bear market
When a bear market is over is anyone’s guess. Miners and everyone else in the bitcoin market could be in for an even longer, more painful season. But mining companies are already diverging during market downturns in preparation and taking advantage of opportunities in depressed markets. Bull markets are times of celebration for all the growth invested during bear markets. Winners are truly born in bear markets, and in no industry is this more true than bitcoin mining.
Based on the trail so far, it looks like CleanSpark has set itself up for a winner.
This is a guest post by Zack Voell. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
Source: Bitcoin Magazine