CleanSpark Inc., a United States-based Bitcoin (BTC) mining company, has made a strategic move to secure its position in the highly competitive cryptocurrency mining industry. The company recently announced an agreement to potentially acquire a substantial number of Bitcoin miners, totaling up to 160,000 machines by the end of 2024.
Massive miner purchase
In a statement released on January 8, CleanSpark revealed that it had initiated the purchase of 60,000 Bitmain S21 mining units at $16.10 per terahash, amounting to a significant investment of $193.2 million. Delivery of these miners is expected to occur between April and June of 2024.
However, CleanSpark has also set its sights on further expanding its mining operations. The company has secured a strategic call option to potentially acquire an additional 100,000 miners, also at $16 per terahash, before the end of 2024. This option would bring the total number of miners owned by CleanSpark to a staggering 160,000.
CleanSpark’s ambitious miner acquisition plan is not merely about increasing its mining fleet but significantly boosting its hash rate. The company anticipates that if all 160,000 miners are successfully installed and operational, its hash rate will surge to 50 exahashes per second (EH/s). This represents a remarkable 400% increase from its current hash rate of 10 EH/s.
The anticipation of future bull markets drives the move to strengthen its mining capabilities. CleanSpark’s CEO, Zachary Bradford, emphasized the importance of this strategic move as a hedge against rising machine prices during bullish periods.
In the past, machine prices in the cryptocurrency mining sector have soared three to five times during bull markets. Bradford expressed confidence that similar price increases could occur, and CleanSpark aims to be well-prepared.
“In the last bull market, machine prices increased by three to five times, and we expect the same to occur in future bull markets,” Bradford stated. “We are ready to expand into the next bull market without worrying about an increase in machine prices.”
Efficient capital management
CleanSpark’s strategic agreement not only focuses on expanding its mining capacity but also on efficient capital management. By securing a significant number of miners at a fixed price, the company gains control over an essential variable in its operations. This strategy allows CleanSpark to navigate the cryptocurrency market’s volatility more confidently, providing stability to its cost structure and capital allocation.
Bradford commented on the significance of this approach, stating, “It also provides us the flexibility to time our infrastructure growth with macro events while providing certainty of cost on the miners.”
Industry-wide preparations for BTC halving
CleanSpark is not the only player in the cryptocurrency mining industry making substantial investments to prepare for upcoming events. Marathon Digital Holdings, Riot Blockchain, and Cipher Mining have also recently moved to expand their mining operations ahead of the BTC halving event, which is expected in April.
The Bitcoin halving event, which occurs approximately every four years, reduces the reward miners receive for confirming transactions on the network by half. This reduction in block rewards can significantly impact the profitability of mining operations. As a result, miners worldwide are making strategic decisions to optimize their infrastructure and maintain their competitive edge in the evolving Bitcoin ecosystem.