A look at why some Bitcoin miners continue to thrive in the bear market, while others need to rethink their strategies to continue trading.
The Bitcoin mining industry continues to have a challenging year as does the price of Bitcoin
around $20,000, along with rising energy costs in North America and Europe. Regulations have also recently started to crack down on crypto mining, as a recent report from the Bitcoin Mining Council (BMC) found that Bitcoin saw a 41% increase in energy consumption year over year (YoY). As a result, several crypto mining companies were forced to sell equipment, while others filed for bankruptcy.
But this has not been the case for some miners, especially those focused on clean energy solutions and strategic approaches. For example, in September, crypto mining firm CleanSpark announced a deal to acquire Mawson’s Bitcoin mining facility in Sandersville, Georgia for $33 million. Crypto mining company White Rock Management has also recently expanded its mining operations to Texas.
Why are some bitcoin miners living in a bear market?
CleanSpark CEO Matthew Schultz told Cointelegraph that he sees mining as a unique way to reduce energy costs when used for reasons other than profit. According to Schultz, this perspective set CleanSpark apart from other crypto mining companies. “Bitcoin mining is a potential solution to create more opportunities for energy development,” he said.
Schultz explained that CleanSpark partners with cities across the United States, such as Georgia and Texas, to purchase excess energy. For example, he noted that CleanSpark works with local areas in Georgia that receive power from the Georgia Municipal Power Authority.
“These cities basically become our utility providers. They make a profit on every kilowatt hour we buy to run our mining operations. But we buy such high amounts of power that it drives down energy costs for the communities we work with. Our goal is to positively impact cities by reducing energy costs,” he said.
CleanSpark CEO Zach Bradford inspects a mining pod with technicians at the company’s College Park Bitcoin mining campus. Source: CleanSpark
Schultz also noted that CleanSpark has formed a partnership with energy company Lancium to support its West Texas data center by purchasing excess renewable power to create grid stability. As a result, Schultz shared that CleanSpark currently has half a billion US dollars worth of assets on its balance sheet and less than $20 million in debt, along with backing from investors like BlackRock and Vanguard. Given this, Schultz believes that the crypto bear market has affected CleanSpark differently compared to other crypto miners.
For example, he noted that when a Bitcoin was worth $69,000 a year ago, many miners discussed plans to hold BTC. “These miners have also made big commitments to companies like Bitmain for future mining delivery,” he said. However, according to Schultz, CleanSpark did a comprehensive analysis of the number of mining units ordered last year, while also looking at future energy projections. He said:
“We came to the conclusion that instead of shipping a stockpile of mining equipment to vendors last November, which has just been delivered now, we saw the potential for an overabundance of rigs and rising energy costs. Therefore, we sold Bitcoin when it was in the $60,000 range and invested the profits in infrastructure.
Not only did this allow CleanSpark to acquire its new mining facility in Sandersville, Georgia, but Schlutz also noted that the company is currently buying Bitcoin mining rigs at a very low price. “We are buying rigs at $17 per terahash that were $100 per terahash a year ago.”
As many miners are forced to sell their equipment, both used and new miners are being sold at below-market prices, creating buying opportunities for companies like CleanSpark.
Scott Offord, owner of Scott’s Crypto Mining, a service that offers new and used mining equipment, along with mining training courses, told Cointelegraph that prices for miners are now very low, in part due to a lack of demand due to the low price of Bitcoin. . Offord added that many of the miners