The Bitcoin mining industry continues to face a challenging year as the price of Bitcoin (BTC) hovers below $20,000, coupled with rising energy costs
The Bitcoin mining industry continues to face a challenging year as the price of Bitcoin (BTC) hovers below $20,000, coupled with rising energy costs in North America and Europe. Regulators have also recently started clamping down on crypto mining, as a recent report from the Bitcoin Mining Council (BMC) found that Bitcoin has seen a 41% increase in energy consumption year-on-year (YoY). As a result, a number of crypto mining companies have been forced to sell off equipment, while others have filed for bankruptcy.
Yet, this hasn’t been the case for some miners, particularly those focused on clean energy solutions and strategic approaches. For example, in September, crypto mining firm CleanSpark announced an agreement to acquire Mawson’s Bitcoin mining facility in Sandersville, Georgia, for $33 million. The crypto mining company White Rock Management also recently expanded its mining operations to Texas.
Why some Bitcoin miners are thriving in a bear market
Matthew Schultz, executive chairman of CleanSpark, told Cointelegraph that he views mining as a unique way to decrease energy costs when leveraged for reasons other than making profits. According to Schultz, this perspective has differentiated CleanSpark from other crypto-mining companies. “Bitcoin mining is a potential solution for creating more opportunities for energy development,” he said.
Schultz elaborated that CleanSpark partners with cities in the United States, like Georgia and Texas, to buy excess energy. For example, he noted that CleanSpark works with local areas in Georgia that receive energy from the Municipal Electric Authority of Georgia.
“These cities essentially become our utility provider. They make a margin on every kilowatt hour we buy to conduct our mining operations. Yet, we are buying such high quantities of energy that it brings down energy costs for the communities we work with. We aim to impact cities posivetly by driving energy costs down,” he said.
Schultz also pointed out that CleanSpark formed a partnership with the energy company Lancium to support their data center in West Texas by buying excess renewable energy to create grid stability. As a result, Schultz shared that CleanSpark currently has half a billion United States dollars worth of assets on its balance sheet and less than $20 million in debt, along with support from investors like BlackRock and Vanguard. Given this, Schultz believes that the crypto bear market has impacted CleanSpark differently in comparison with other crypto miners.
For instance, he noted that when one Bitcoin was worth $69,000 a year ago, many miners were discussing plans to hold BTC. “These miners also made huge commitments to companies like Bitmain for the future delivery of mining rigs,” he said. Yet, according to Schultz, CleanSpark conducted extensive analysis of the number of mining rigs being ordered last year while also looking at future energy projections. He stated:
“We reached the conclusion that rather than sending a deposit for mining equipment to providers last November that are just now being delivered, we saw the possibility of an oversupply of rigs and an increase in energy costs. Therefore we sold Bitcoin when it was in the $60,000 range and invested proceeds in infrastructure instead.”
Not only did this allow CleanSpark to acquire its new mining facility in Sandersville, Georgia, but Schlutz also noted that the firm is currently purchasing Bitcoin mining rigs at a very low rate. “We are buying rigs for $17 per terahash that one year ago cost $100 per terahash.”
As a number of miners are forced to sell their equipment, both used and new mining rigs are being sold at below market prices, creating buying opportunities for firms like CleanSpark.
Scott Offord, owner of Scott’s Crypto Mining — a service that provides new and used mining equipment, along with mining training courses — told Cointelegraph that prices for miners are now very inexpensive, partly based on a lack of demand due to the low price of Bitcoin. Offord added that many of the used miners he is currently selling have come from hosting facilities in debt. He said:
“During the last bull run you couldn’t get miners without a 6-month lead time. It’s the opposite now since many miners aren’t capitalizing. Usually, Bitcoin miners get rid of their gear because equipment is old and something newer is on the market, but it seems like now people are selling because they need cash flow.”
Offord also pointed out that he is seeing a lot of new mining gear hit secondary markets. “Many new generation Antminers are being resold. For example, things like S-19s, which are some of the most efficient miners in the world right now,” he said.
In terms of pricing, Offord explained that crypto miners may be able to buy a new Antminer S-19j pro for about $20 per…
cointelegraph.com