It’s no secret that the bitcoin bear market is bad right now. By some metrics, it’s one of the worst drops in Bitcoin’s young history. And few sectors of the Bitcoin economy are as affected by current market conditions as miners. But bear markets are precisely when the mining winners separate from the losers: nimble and smart teams build and survive while overleveraged and unprepared teams fall in an adverse environment.
One company that has continued to grow, acquire and build through the bear market is CleanSpark, a publicly traded bitcoin mining company based in Nevada. This article highlights some of the moves this team has made over the past few months, contextualized with some of the brutal state of the mining market, making CleanSpark’s planning and execution all the more impressive and remarkable.
Before proceeding, it is important to note that this article is for educational purposes only. The author compiled this information and analysis to share as market commentary, not any form of advice. The author also does not own stock in CleanSpark or have any other form of personal financial investment with the company.
The Down Market of Bitcoin Mining
The price of bitcoin is down about 70% from its all-time highs. The hash price (the dollar value of each hashrate unit) is quickly approaching all-time lows. Almost every week there is a new headline about lawsuits, bankruptcies and more bankruptcies in mining. Miners are struggling to stay operational, let alone overtake bitcoin. Almost no matter what 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. Priced in bitcoin, CleanSpark shares are still slightly above where they started the year, according to TradingView data, despite the broader market turmoil, not bad for a bear market.
CleanSpark Bear Market Moves
Many mining companies act as “press release heroes” advertising and planning to grow, but often fail to execute on time or at all. But since its first foray into mining in December 2020, CleanSpark has grown to 100 employees and 3 exahashes (EH) of online hash rate, with the hash rate tripling in the past year alone.
CleanSpark has also made a sustained purchase of mining hardware even as market conditions worsened, or perhaps because of it. The company bought 4,500 Antminer S19 last October and 2,597 more the following month. In June, he bought purchase contracts for 1,800 Antminer S19 XP. In July, the company secured 1,060 Whatsminer M30S. In August, it bought another 3,400 Antminer S19s, followed by another 10,000 Antminer S19j Pros in September.
CleanSpark has also closed new deals, partnerships and acquisitions almost every month this year, including $35 million in new funding (April), a partnership with TMGcore (June), a co-location deal with Coinmint (July), an 86 megawatt ( July). MW) acquisition of mining facilities in Georgia (August) and acquisition of a turnkey mining site from Mawson (September).
And amid all that growth, the company’s strong finances set it apart as having one of the lowest debt to equity ratios throughout the public mining sector. Jaran Mellerud, mining analyst at Arcane Research, said from 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 teams in this sector of the bitcoin market, namely an energy company that transitioned into a mining company. Founded in 1987 as a software and energy company, CleanSpark began looking at the mining industry only in the last two years. According to Matthew Schultz, executive chairman of CleanSpark, the company was doing its due diligence on the mining sector throughout 2020 and saw the series of high-profile bitcoin investments by Square, Tesla and MicroStrategy as a “ additional validation” 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 a bit of an advantage over other mining companies that are merging with or partnering with the energy industry. For example, CleanSpark is well aware of the obstacles facing 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 consistent load,” Bradford said, referring to the hurdles miners face in structuring deals with power companies.
The end of the bear market
When the bear market will end is anyone’s guess. Miners and everyone else in the bitcoin market could be in for an even longer and more painful period. But mining companies are already parting ways during the market downturn in preparation and taking advantage of opportunities in a depressed market. Bull markets are times of celebration for all the effort put into growth during bear markets. Winners are truly made during bear markets, and this is no more true of any industry than bitcoin mining.
Based on its path so far, it looks like CleanSpark is set up to be a winner.
This is a guest post by Zack Voell. The opinions expressed are entirely my own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
