Key Points
- Bitcoin miner CleanSpark’s shares increased by 12% after announcing plans to acquire new mining facilities.
- The company finalized a deal to purchase three sites in Mississippi for $19.8 million, expected to contribute 14% of the company’s revenue.
- CleanSpark also plans to procure a facility in Dalton, Georgia, with an initial cash payment of $3.4 million.
- The cryptocurrency sector expects consolidation within the bitcoin mining industry, especially among smaller miners with higher operational costs or outdated hardware.
- Bitcoin miners are preparing for an anticipated reduction in revenue stemming from the upcoming halving in April.
CleanSpark (NASDAQ: CLSK), a Bitcoin miner, saw its shares rise by 12% on February 6.
The increase came after the firm announced plans to acquire new mining facilities to enhance its infrastructure and potentially double its hashrate by the first half of 2024.
It was reported that CleanSpark has agreed to buy three “turnkey” sites in Mississippi.
The purchase, which costs $19.8 million in cash, is expected to be completed within 21 days.
These sites, which only require the connection of existing hardware, are projected to contribute approximately 14% of the company’s revenue shortly after the closing.
In addition, CleanSpark plans to acquire a facility in Dalton, Georgia, with an initial cash payment of $3.4 million.
The Bitcoin Mining Consolidation
Consolidation is anticipated within the bitcoin mining industry, particularly among smaller miners with higher operational costs or outdated hardware.
This is expected to be especially true with the upcoming Bitcoin halving in the spring, which will reduce miner rewards to 3.125 BTC.
Zachary Bradford, CleanSpark CEO, told CNBC that the company foresees the likelihood of certain miners exiting the market post-Bitcoin halving.
He mentioned the company’s interest in identifying facilities where it can seamlessly integrate its own mining machines.
About a month ago, CleanSpark acquired 160,000 mining machines.
Bradford said that the expansion will allow the company to quickly slot in its own servers so that operations can commence almost immediately after closing the deal, thereby shortening the path to ROI.
Generally, mining stocks experience gains with rising Bitcoin prices as they directly correlate with increased mining revenue for the company.
In 2023, Bitcoin miners emerged as standout performers, surpassing even Bitcoin itself.
Bitcoin Miners on Selling Spree Ahead of BTC Halving 2024
However, Bitcoin miners are preparing for an anticipated reduction in revenue stemming from the upcoming halving in April.
Since the beginning of 2024, miner reserves, unsold Bitcoin held in digital wallets linked to the companies, have declined by 8,400 tokens to 1.8 million.
This level matches figures observed in June 2021, according to data gathered by CryptoQuant.
Analysts interpret this decrease as a sign that miners are offloading tokens.
Matthew Sigel, head of digital-asset research at VanEck, said miners have begun to sell more of their coins to bolster balance sheets and fund growth capex ahead of tougher times for margins when block rewards are halved in April.
He added that after the halving, scale will matter even more.
