CleanSpark Takes Advantage of Bear Market to Acquire Mining Rig Contracts

CleanSpark (CLSK), is taking advantage of the bear market and falling prices for bitcoin mining rigs by buying existing purchase contracts from another miner for 1,800 Antminer S19 XP computers.

The Las Vegas-based, sustainable bitcoin miner said in a statement that the machines will add over 252 petahashes per second (PH/s) of hashrate to CleanSpark’s bitcoin mining capacity, once fully deployed. The bitcoin mining specific computers, called ASICs, will start arriving at CleanSpark's facilities in August, and shipping will continue through the next six months. The miner currently has 25,000 latest-generation bitcoin miners with a hashrate over 2.5 EH/s.

The miner took advantage of the recent market conditions, where a sell-off in bitcoin prices has led to a decline in ASICs prices. A tough capital market and difficulty in securing power purchase agreements by miners have also caused an excess supply of ASICs – which cannot be plugged in to mine bitcoins – contributing to the lower prices of the mining rigs.

Due to lack of funding, miners have not been able to fulfill previous orders of mining rigs for which they have paid deposits. “With our research that we have done, we found that a sample set of public miners still owe $1.9 billion this year, for the ASIC purchases that they've committed to,” said Galaxy Digital’s head of mining Amanda Fabiano during a panel discussion at Consensus 2022 in Austin, Texas.

The current conditions have given CleanSpark and other miners an opportunity to buy mining rigs at lower prices for expanding their operations. “We were able to secure the contract at an exceptional price because of our strategic relationships and the unique circumstances that current market conditions have created,” CEO Zach Bradford said.

The contract was brokered by Cryptech, a U.S. based supplier of cryptocurrency mining machines and longtime partner of the miner, according to the statement.

CleanSpark didn’t specify the prices for the contracts but a source close to the matter said that it has paid less than the spot prices for the rigs. The prices for latest generation ASICs have traded around $60 per terahash ($/TH), the lowest since July last year when China banned mining, according to Luxor Technologies’ Hashrate Index data. The prices topped just over $100/TH in December, the data suggests.

CleanSpark also announced a partnership with TMGcore, a developer of high performance computing solutions, to expand its immersion-cooled infrastructure for bitcoin mining. The deal includes 257 units of TMGcore’s proprietary immersion cooled tanks that are specifically designed to improve the performance of mining machines while substantially decreasing their failure rates over long-term use, according to the statement.

In liquid immersion cooling, which is an alternative to traditional air-cooling systems, mining machines are fully immersed in a synthetic hydrocarbon compound liquid that has no electrical conductivity and is fully biodegradable. The specialized liquid can reduce heat, power consumption and noise stemming from the computers as well as prolong the lifespan of the machines, allowing miners to maximize profit.

Each tank fits 28 Antminer S19j Pro mining machines and the units will be deployed in batches at CleanSpark’s College Park, Ga., property and other locations. The partnership also provides CleanSpark with 2 megawatts (MW) of colocation capacity at TMGcore’s immersion-cooled mining facility in Plano, Texas.

In December, CleanSpark bought 20MW immersion cooling infrastructure for its Norcross, Ga., bitcoin mining facility. Eight of the datacenter's 20MW capacity are already fully operational, while the remaining 12 MW are expected later this year, according to Wednesday’s statement.