It’s no secret that the bitcoin bear market is bad right now. By some measures, this is one of the worst declines in Bitcoin’s young history. Few sectors of the Bitcoin economy are as harshly affected by current market conditions as miners. But bear markets are exactly when the winners in mining separate from the losers: Agile and smart teams build and survive, while overworked and underprepared teams fall victim to the negative environment.
One company that continues to grow, acquire and build through the bear market is Nevada-based publicly traded bitcoin mining company CleanSpark. This article highlights some of the actions this team has taken over the past few months, contextualized by the somewhat brutal state of the mining market, and makes CleanSpark’s planning and execution more impressive and noteworthy.
Before proceeding, it is important to note that this article is for educational purposes only. The author has compiled this information and analysis to share as market commentary and not as any form of advice. The author also owns no stock in CleanSpark and has no other form of personal financial investment with the company.
Bitcoin Mining Bear Market
The price of Bitcoin is down almost 70% from the record high. The hash price—the dollar value of each unit of hash rate—is rapidly 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 in operation, let alone surpass bitcoin. Almost no matter what data one looks at, the current bear market is messy and not very fun.
Through it all, the CleanSpark team continues to grow, acquire, and build, as explained in the next section. Despite the broader market turmoil, it’s not all bad for a bear market — Bitcoin-denominated CleanSpark shares are still slightly above where they started the year, according to data from TradingView.
CleanSpark’s Bear Market Is Moving
Many mining companies act as “press release heroes”, announcing and planning for growth, but often failing to deliver on schedule or at all. But since its first foray into the mining sector in December 2020, CleanSpark has since grown to 100 employees and 3 exahashes (EH) of its online hash rate, tripling its hash rate in the last year alone.
CleanSpark has been on a sustained buying spree for mining equipment, even as market conditions have deteriorated — or perhaps because of it. The company bought 4,500 Antminer S19 units last October, and another 2,597 units the following month. In June, 1,800 Antminers received purchase contracts for S19 XP. In July, the company acquired 1,060 Whatsminer M30S. It bought another 3,400 Antminer S19s in August, and an additional 10,000 Antminer S19j Pros in September.
CleanSpark also announced 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 agreement with Coinmint (July), an 86-megawatt (July) MW ) acquisition of a mining facility in Georgia (August) and acquisition of a turnkey mine site from Mawson (September).
And amid all this growth, the company’s healthy financials make it stand out as having one of the lowest numbers debt to equity ratio in the entire state mining sector. Jaran Mellerud, mining analyst at Arcane Research, he said of the company: “CleanSpark’s combination of quality and low valuation makes it one of the most exciting bitcoin mining stocks going forward.”
A Brief History of CleanSpark
CleanSpark represents a unique mining company unlike most teams in this sector of the bitcoin market, i.e. an energy company turned mining company. Founded in 1987 as a software and energy company, CleanSpark only began pursuing the mining industry in the past few years. According to CleanSpark’s executive chairman, Matthew Schultz, the company has made efforts in the mining sector throughout 2020, seeing 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 an advantage over other mining companies that are merging or partnering with the energy industry. For example, as CEO Zach Bradford told a mining panel during the Bitcoin 2022 conference in Miami, CleanSpark is well aware of the obstacles to partnerships and negotiations between the two industries.
“No one knows how to estimate that much power that fits into one load,” Bradford said, referring to the hurdles miners face in negotiating deals with power companies.
The End of a Bear Market
When a bear market will end is anyone’s guess. A longer, more painful period awaits miners and everyone in the bitcoin market. But mining companies are already prepared to separate themselves during market downturns and take advantage of opportunities in a depressed market. Bull markets are times when all efforts towards growth are celebrated during bear markets. Winners are truly made during bear markets, and for no industry is this more true than bitcoin mining.
Based on the path it’s taken so far, it looks like CleanSpark is set to win.
This is a guest post by Zack Voell. The views expressed are entirely their own and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.