Ben Strack

Though most mining stocks have so far taken a dive this year, industry watchers expect investors to buy back into the strongest such companies after the Bitcoin halving dust settles.



Some of the world’s largest public mining companies have watched their stock prices plummet in recent months.



The stock of mining giant Marathon Digital is down roughly 33% so far this year.&nbsp;



Shares of rivals Hut 8 and Riot Platforms are slightly worse off over that span, down about 35% and 46%, respectively. <a href="https://blockworks.co/news/adam-sullivan-core-scientific-bitcoin-halving">Core Scientific’s stock</a> has dropped about 16% since coming out of bankruptcy in January.



Las Vegas-based CleanSpark has been an anomaly, as its stock price has seen a 55% boost in 2024.&nbsp;



These nearly across the board declines come as investors wait to see which miners will be best positioned after the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> given the upcoming reduced block rewards — from 6.25 BTC and 3.125 — and the impact of that on miner profitability.



Read more: <a href="https://blockworks.co/news/mining-firms-prepare-for-bitcoin-halving">The Bitcoin halving is just weeks away — here’s how miners have prepared</a>



Bitcoin halving events, which occur every four years, often trigger “speculative bubbles” that peak about a year after each cycle, said StoneX Digital data scientist David Kroger.



“Investors may have adjusted their expectations and positions based on historical market trends surrounding halving events, including significant price fluctuations and market sentiment shifts,” he added.



Those allocating capital to the space have also had a new way to access BTC since Jan. 11, when the Securities and Exchange Commission approved the first US spot bitcoin ETFs.



“You now have a situation where there is an option to get commodity exposure as an institutional investor with the spot bitcoin ETF that mitigates the company risk that you take on when you invest in a bitcoin miner,” Sue Ennis, head of investor relations at Hut 8, said during a Tuesday X space.



While <a href="https://blockworks.co/news/bitcoin-etf-outflows-strike-again">demand for the US spot bitcoin ETFs has slowed</a> recently, the fund category has brought in roughly $12.5 billion of net inflows in just over three months on the market.&nbsp;



<h2 class="wp-block-heading">Waiting until the dust settles</h2>



Miner stocks have previously underperformed bitcoin going into the halving and outperformed BTC after the event, said Compass Point Research &amp; Trading analyst Joe Flynn.



Read more: <a href="https://blockworks.co/news/bitcoin-mining-stocks-crypto-rally">Why most bitcoin mining stocks are down amid a persistent crypto rally</a> &nbsp;



With spot bitcoin ETFs available, Flynn said miners appear to be trading based on the halving-fuelled hash price declines rather than the BTC exposure they provide.



<a href="https://data.hashrateindex.com/chart/bitcoin-hashprice-index">Hash price</a> takes into account bitcoin price, network difficulty, block subsidy and transaction fees. Measuring how much a miner can expect to earn from a specific quantity of hash rate, the metric is positively correlated to BTC price and negatively linked to fluctuations in bitcoin <a href="https://blockworks.co/tag/mining">mining</a> difficulty.



“Any bounce of hash price off the lows post-halving and we think the stocks react positively,” Flynn told Blockworks. “Based on past cycles, we would expect a period of consolidation of BTC prices before a resumption of an uptrend higher in the second half of 2024 and into 2025.”&nbsp;



Miners holding hefty sums of bitcoin on their balance sheet are likely to benefit from any post-halving BTC price growth from a stock perspective, Flynn added.



Marathon currently leads that category among miners, with 17,381 BTC BTC on its balance sheet as of March 31. Hut 8 and Riot Platforms held 9,102 BTC and 8,490, respectively, at that time.&nbsp;&nbsp;



“But we think investors [will] start to look at fundamentals like EBITDA, [free cash flow] and operating leverage on low power costs post-halving,” he said.



Executives said the public market appears to be struggling to put a proper value on mining companies.&nbsp;



Ennis argued that the market is discounting Hut 8’s managed services and high-performance computing businesses, for example.&nbsp;&nbsp;



As the market matures, she added, investors and institutions are likely to do more due diligence around the varying business models of different miners.



“I do think we are going to see capital and interest come back to this asset class after the halving after the market can see sort of who still has their shirt on and what’s the upside,” Ennis said.



Jeff Hancock, CEO of Coinpass, said he expects the mining stocks to behave similarly to bitcoin’s post-halving price action in previous cycles.&nbsp;&nbsp;&nbsp;



“It could be some time before these mining stocks recover, unless these firms can reduce their energy and operational costs,” he said. “Some of them may have to wait out the storm until bitcoin prices rise if they don&#8217;t have any additional income streams.”



Bitcoin’s price (<a href="https://blockworks.co/price/btc">BTC</a>) was at about $63,800 at 12:30 pm ET Thursday — up 4% on the day but down nearly 10% from a week ago.



The public miners could see more immediate share price gains if more bitcoin exchange-traded products are approved in areas such as Asia and the UK, Hancock argued.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/crypto-etf-regulation-in-asia">After crypto ETF movement in Hong Kong, other Asia regulators could act</a>&nbsp;



“These institutional spot instruments were already absorbing more bitcoin than was being mined pre-halving,” he told Blockworks. “Post-halving, we could experience an extreme supply shock returning bitcoin’s price to current or higher levels, while also increasing miners stock prices.”



<h2 class="wp-block-heading">Those that are best positioned?</h2>



Galaxy analysts said in a February <a href="https://www.galaxy.com/insights/research/bitcoin-big-halving-year/">report</a> that between 15% and 20% of the bitcoin network hash rate could come offline after the halving.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms</a>



CleanSpark executive Chairman Matthew Schultz said during the Tuesday X space that access to capital — allowing companies to deploy the most efficient machine fleets — will be a real differentiator after the halving.&nbsp;



On the balance sheet alone, Marathon Digital and Riot Platforms each have more than $1 billion in combined cash and BTC.&nbsp;



CleanSpark had about $300 million in cash and 5,021 BTC (worth roughly $320 million) available at the end of March.&nbsp;



Companies with big warchests are expected to acquire machines and companies from smaller, less capitalized .&nbsp;



Stronghold Digital has seen its stock price dip 58% in 2024. The company, if deemed an attractive M&amp;A target by an industry peer, would “consider” such a deal, CEO Greg Beard previously told Blockworks.&nbsp;



Argo Blockchain, which has endured a similar share price drop to Stronghold, declined to comment on its post-halving M&amp;A strategy.



Read more: <a href="https://blockworks.co/news/post-bitcoin-halving-miner-mergers-acquisitions">Buyers and sellers: How bitcoin miners are thinking about post-halving M&amp;A</a>



As for miners with potential high upside, Flynn noted that Riot’s cash and BTC represent roughly 50% of the company’s market cap.&nbsp;



Iris Energy and Bitfarms both intend to double their hash rate this year, he said, while infrastructure-minded Core Scientific and Terawulf are “mispriced.”&nbsp;&nbsp;&nbsp;



The stock prices of Iris Energy and Bitfarms both stand about 30% below where they started the year. Terawulf has fared better, down about 7% year to date.&nbsp;&nbsp;



Flynn added: “I like miners trading at the lowest multiples that have locked in next generation machines — which lowers hash costs — and have the ability to grow to offset initial halving impact.”



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How the Bitcoin halving could impact ailing mining stocks

David Canellis

This is Cheatsheet, a primer on what’s happening in crypto today.



Crypto has hit that point of the bull market where anything and everything is rallying without any real link between star performers.



Today, toncoin (<a href="https://blockworks.co/price/ton">TON</a>) is beating the top end of the table, up 25% as of 8 am ET. While TON is its own layer-1 blockchain, the token finds utility with a web of Telegram trading bots rapidly gaining popularity over the past year.



<a href="https://blockworks.co/price/xrp">XRP</a> is second for the day with 12.5%, followed by flow (<a href="https://blockworks.co/price/flow">FLOW</a>), the native crypto for the NFT-focused chain built by Dapper Labs, which is up 9%.



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) have ended up flat over the same period. Crypto’s total market capitalization is now only 7% shy of its $3 trillion record high, set in late 2021.



<h2 class="wp-block-heading">On-chain mail</h2>



After plateauing for six weeks, Ethereum is now burning supply faster than at any point in the past nine months.



<ul>
<li>The ETH supply has shrunk by 74,603 ETH ($300 million) over the past month.</li>



<li>Burns were totally stagnant between Christmas and the second week of February.</li>



<li>Ethereum will burn $10 billion ETH over the next year at its current pace (and current prices), per <a href="https://ultrasound.money/">ultrasound.money</a>.</li>
</ul>



As of August 2021, the Ethereum network burns a small amount of ETH with every transaction — specifically the base fee paid by users.



The ETH supply has shrunk by 0.31% over the past year and is currently on track to reduce by 1.42% over the next if on-chain activity keeps up.&nbsp;



The network still issues fresh ETH with every block: without burns, the circulating ETH supply would increase by 0.5% every year.



<ul>
<li>Top DEX Uniswap still burns more ETH than any other platform — more than 22,000 ETH ($87.9 million) over the past month.</li>



<li>Telegram trading bot Banana Gun is burning more ETH than layer-2s Arbitrum and Optimism.</li>



<li>ETH supply is tipped to dip below 120 million sometime in May, which would return it to Aug. 2022 levels.</li>
</ul>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="597" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png" alt="" class="wp-image-82296" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2024/03/image-3.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Ethereum supply may have peaked in September 2022 (<a href="https://ultrasound.money/">source</a>)</figcaption></figure>



<h2 class="wp-block-heading">Crypto business</h2>



Bitcoin’s strength still hasn’t converted to gains for crypto stocks, with only two set to open Tuesday higher: MicroStrategy and Coinbase.



<ul>
<li>MicroStrategy gained 4.11% on Monday and added another 5% after hours as of 7 am, ET.</li>



<li>Coinbase slipped nearly 1% but regained 1.5% post-bell.</li>



<li>CleanSpark and Marathon took a beating, down 17.24% and 13.2%, respectively.</li>
</ul>



Still, CleanSpark is the only miner to beat S&amp;P 500 over the past month, now up 20% to the S&amp;P’s 2%. The Las Vegas-headquartered firm announced plans to double its hashrate in February.&nbsp;



Over the year-to-date, CleanSpark’s 52% gains are second only to MicroStrategy, now up 147%. Coinbase trails slightly with 48.3%.&nbsp;



CleanSpark, now the second-largest mining stock by market value, flipped Colorado-headquartered Riot earlier this month, worth $3.34 billion to $2.98 billion.&nbsp;



<ul>
<li>Former MicroStrategy CEO Michael Saylor has sold $167.4 million in MSTR shares this year, per OpenInsider.</li>



<li>Saylor sold those shares for $688.29 on average, MSTR currently trades for more than double that price.</li>



<li>He announced a plan to sell 315,000 shares in January — he’s more than three-quarters of the way through that stack.</li>
</ul>



<h2 class="wp-block-heading">On the ground</h2>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">from the creators of orb salute (<a href="https://twitter.com/0xPenryn?ref_src=twsrc%5Etfw">@0xPenryn</a>), we bring you: orb wif hat <a href="https://t.co/acYTZkBn2a">pic.twitter.com/acYTZkBn2a</a>&mdash; dcbuilder.eth 🕯4844🕯.oO (@DCbuild3r) <a href="https://twitter.com/DCbuild3r/status/1767505442215792976?ref_src=twsrc%5Etfw">March 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">We never stood a chance</figcaption></figure>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">New Prometheum just dropped. The SEC&#39;s posture child for &quot;regulatory compliance&quot; is on thin ice. On Friday PM the company buried a filing for their Ember ATS entity that shows an increasingly precarious financial state. $468k cash despite a $5.1m injection from the parent co. <a href="https://t.co/HwUv3D9oZT">https://t.co/HwUv3D9oZT</a> <a href="https://t.co/FFXNPO3ACO">pic.twitter.com/FFXNPO3ACO</a>&mdash; Matt Walsh (@MattWalshInBos) <a href="https://twitter.com/MattWalshInBos/status/1767374300590293168?ref_src=twsrc%5Etfw">March 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Prometheum is bleeding cash</figcaption></figure>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">fun fact. in q2 2020 when microstrategy first announced their bitcoin buy strategy, not a SINGLE question on the earnings call was about bitcoin. every wall street analyst completely ignored it the stock is up 12x since then<a href="https://t.co/D69j5IEIhQ">https://t.co/D69j5IEIhQ</a>&mdash; nic 🌠 carter (@nic__carter) <a href="https://twitter.com/nic__carter/status/1767386297348293070?ref_src=twsrc%5Etfw">March 12, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Analysts in disbelief</figcaption></figure>



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Cheatsheet: Ethereum on track to burn $10B ETH over next year

As the bitcoin halving approaches, miner consolidation appears imminent.



Per-block rewards for BTC miners are set to decrease from 6.25 bitcoins to 3.125 BTC in mid-April. The event is expected to put financial stress on companies in the sector, likely spurring some to look for a lifeline.



Elliot Chun, a partner at crypto advisory firm Architect Partners, said he expects “meaningful” mining-related mergers and acquisitions (M&amp;A) in the second half of 2024, and into next year.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-markets-explainer">The next bitcoin halving is coming. Here’s what you need to know</a>&nbsp;



“We have what I believe is a much healthier buyer set that has the capital, operating discipline and they want to be opportunistic with their growth expansions,” Chun told Blockworks. “And then on the flip side, some of the smaller mining groups are likely going to struggle.”&nbsp;



Hut 8 Mining and US Bitcoin Corp. closed a “merger of equals” in November. Marathon Digital more recently <a href="https://blockworks.co/news/marathon-digital-terminates-competitor-involvement">acquired sites in Nebraska and Texas</a>, while CleanSpark <a href="https://blockworks.co/news/cleanspark-site-acquisition-bitcoin-halving">bought three facilities in Mississippi</a>. But other deals could be in the cards in 2024.



Miners may consider mergers and acquisitions this year to reduce power costs, become more vertically integrated or raise capital, analysts at Galaxy Digital wrote in a Feb. 12 <a href="https://www.galaxy.com/insights/research/bitcoin-big-halving-year/">report</a>.



“While fleet upgrades and joint ventures have been instrumental in enhancing operational resilience, miners unprepared for the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> may find themselves in a precarious position,” they added.



Indeed, the hash rate from a portion of application-specific integrated circuit (ASIC) models is expected to go offline as the halving changes the breakeven revenues for such machines.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-miners-hashrate-offline">20% of bitcoin network hash rate could go offline after halving: Galaxy</a>



Compass Point Research &amp; Trading analyst Chase White previously told Blockworks that home retail miners, smaller private operations and miners in areas with higher power costs are particularly at risk of shuttering.



<h2 class="wp-block-heading">What the big players are looking for</h2>



Large <a href="https://blockworks.co/tag/mining">mining</a> companies that survived the last bear market have proven their resiliency, Chun said — adding he expects them to be “very inquisitive and active on the precipice with the halving.”



Salman Khan, chief financial officer of bitcoin mining giant <a href="https://blockworks.co/tag/marathon-digital">Marathon Digital</a>, said during a November earnings call that less efficient and undercapitalized miners were already looking to be acquired before the halving.



Marathon has an “ample amount of liquidity and optionality to strategically evaluate opportunities” that the upcoming event catalyzes, Khan said.&nbsp;



The company had $319 million in cash on its balance sheet and held 15,741 BTC, as of Jan. 31.&nbsp;



“We believe there will be many inorganic opportunities to acquire very low-cost assets, especially attractive power contracts in the potentially turbulent times ahead post the halving,” Marathon CEO Fred Thiel said on the November earnings call.



Price per megawatt, a site’s source of energy and the regulatory environment are just a few considerations when weighing acquisitions, according to Charlie Schumacher, Marathon’s vice president of corporate communications.



The efficiency of miners is another factor, as a lot of “old inefficient miners are up for sale,” he told Blockworks.&nbsp;&nbsp;



Meanwhile, rival company <a href="https://blockworks.co/tag/cleanspark">CleanSpark</a> had $48.5 million of cash on its balance sheet, as of Dec. 31, as well as about $127 million worth of bitcoin.



The Las Vegas-based company considers electricity, site quality and community impact when making M&amp;A-related decisions, chief communications officer Isaac Holyoak said.



“The number one consideration is reliable, abundant energy that has a good mix of generation sources, including low-carbon energy, at cost-effective prices,” Holyoak added.



The CleanSpark executive noted that machine efficiency is also crucial.&nbsp;&nbsp;



“We will rehabilitate sites, but we won&#8217;t take on old servers,” Holyoak told Blockworks. “We almost always bring in our own hardware and do not expect to acquire another company&#8217;s fleet unless it meets our strict efficiency standards.”



<a href="https://blockworks.co/tag/riot-blockchain">Riot Platforms</a>, another mining giant, had nearly $600 million in cash on its balance sheet at the end of 2023, and an additional $300 million or so in bitcoin.&nbsp;



Core Scientific — second only to Marathon in deployed self-mining hash rate, at 18.6 EH/s as of Jan. 31 — <a href="https://blockworks.co/news/core-scientific-emerges-from-bankruptcy">emerged from bankruptcy</a> last month after completing a $55 million equity rights offering.&nbsp;



A Riot spokesperson did not return a request for comment about potential M&amp;A activity, while a Core Scientific representative declined to comment.&nbsp;



<h2 class="wp-block-heading">Could we see two large miners merge?</h2>



Hut 8 and US Bitcoin Corp. merged in November in what now-former Hut 8 CEO called “the largest M&amp;A transaction that has ever transpired within our industry.”&nbsp;



Read more: <a href="https://blockworks.co/news/hut-8-mining-ceo-strategy">New Hut 8 CEO prepared to make ‘hard decisions’ to nix inefficiencies</a>



Chun said he doesn’t expect any of the large publicly traded bitcoin miners to join forces around the halving — unless they operate in different regions.



“If you made it through this last cycle, I think you have confidence that [your] growth strategy, as well as your operating acumen, is very high,” he said.



More likely, Galaxy analysts wrote in their report, the better capitalized miners and more liquid miners with low debt levels could scoop up smaller miners. Private miners that are vertically integrated, or those with low valuations, may be attractive targets as well.



Acquiring mining sites could also continue as big miners look to house the hash rate they have acquired in recent months.



<a href="https://blockworks.co/news/riot-plots-hash-rate-growth">Riot Platforms has continued to buy mining machines</a> in an effort to build up its hash rate to 100 exahashes per second (EH/s) over the long term, and <a href="https://blockworks.co/news/crypto-miners-buying-machines">others have done the same</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/crypto-miners-hash-rate-bitcoin-halving">Crypto miners continue ‘sprint’ for hash rate in lead-up to halving</a>



“Identifying such opportunities may prove challenging, as many energization timelines extend into 2025 [and 2026], and back orders for electrical infrastructure have lengthy lead times,” Galaxy analysts noted in their report. “However, 2024 is poised to be a pivotal year for turnkey sites which are ready to be filled with this new hashrate.”



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Bitcoin miner consolidation appears imminent as halving looms

Bitcoin mining giant Riot Platforms has bought more mining machines, while rival CleanSpark has closed its acquisition of three new facilities.



These moves by crypto miners are just the latest efforts aimed at boosting hash rate and optimizing efficiency as segment players prepare for the bitcoin halving.&nbsp;



Riot Platforms bought 31,500 more miners from MicroBT for 97.4 million. The purchase is set to up the company’s self-mining hash rate capacity at its facility in Rockdale, TX from 12.4 exahashes per second (EH/s) to 15.1 EH/s by the end of July.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-btc-price-implications">How the halving could impact bitcoin’s price</a>



The buy of M60S air-coolers machines comes as the company has identified “under-performing” miners Riot CEO Jason Les said in a Tuesday statement. <a href="https://blockworks.co/tag/riot-blockchain">Riot</a> is set to replace 17,000 miners in the Rockdale facility in total, while adding 14,500 more.



Securing newer and more-efficient <a href="https://blockworks.co/tag/mining">mining</a> machines has been a key focus for larger mining firms ahead of the “disruptive” halving event, said Louise Abbott, a crypto-focused partner at Keystone Law.



“Many factors will contribute to the success of bitcoin miners, such as who has the lowest energy costs and the most efficient equipment,” Abbott told Blockworks. “The crypto industry is very much ‘dog eat dog,’ and the lead-up and aftermath of the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> will be no different.”&nbsp;



The company’s new hash rate target by the end of 2024 is 31 EH/s as it seeks to also continue building out its facility in Corsicana, TX.&nbsp;&nbsp;



The move comes after Riot revealed in December that the company had <a href="https://blockworks.co/news/riot-plots-hash-rate-growth">purchased 66,000 mining machines for $290.5 million</a>. It noted that it had the option to buy 265,000 more MicroBT miners on the same terms in a deal that could help it surpass a hash rate of 100 EH/s in the long term.



Read more: <a href="https://blockworks.co/news/crypto-miners-buying-machines">Crypto miners keep busy ahead of halving with accelerated machine buys</a>



Las Vegas-based competitor <a href="https://blockworks.co/tag/cleanspark">CleanSpark</a> is also moving ahead with its hash rate expansion plans, noting Tuesday that its <a href="https://blockworks.co/news/cleanspark-site-acquisition-bitcoin-halving">acquisition of three data centers in Mississippi</a> was complete.&nbsp;



The purchases — as part of a $19.8 million cash deal — were set to expand CleanSpark’s operating hash rate by roughly 2.4 EH/s, the company said earlier this month.



“The teams have already racked miners, sending our fleetwide hashrate to over 15 EH/s, and we are hard at work as we sprint to add more hash rate as quickly as possible,&#8221; CleanSpark CEO Zach Bradford said in a statement. 



Miner moves to increase hash rate and miner efficiency comes ahead of <a href="https://blockworks.co/news/bitcoin-halving-markets-explainer">the next bitcoin halving, slated for April</a>.&nbsp;



At that time, per-block rewards will drop from 6.25 BTC to 3.125 BTC, putting financial stress on miners.&nbsp;



Galaxy Digital analysts said in a Feb. 12 report that up to <a href="https://blockworks.co/news/bitcoin-halving-miners-hashrate-offline">20% of network hash rate from eight mining models could go offline</a> after the halving due to the machines no longer being profitable.&nbsp;



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Crypto miners continue ‘sprint’ for hash rate in lead-up to halving

CleanSpark is the latest bitcoin miner seeing growth through acquisitions in the lead up to the next Bitcoin block reward halving, happening in April. The company said that it expects the buys to help it double its hash rate in the coming months.&nbsp;



The Las Vegas-based company revealed agreements to purchase three bitcoin mining facilities in Mississippi for $19.8 million in cash. The buy is set to boost CleanSpark’s operating hash rate by roughly 2.4 exahashes per second (EH/s).&nbsp;



CleanSpark is also buying an additional facility for its campus in Dalton, GA. The acquisition and build-out of the new property is set to cost the miner about $7 million and add about 0.8 EH/s in hash rate.&nbsp;



Read more: <a href="https://blockworks.co/news/cleanspark-in-house-trading-desk">Bitcoin miner CleanSpark to launch in-house trading desk: Bloomberg</a>



<a href="https://blockworks.co/tag/cleanspark">CleanSpark</a>’s hash rate stood at 10 EH/s on Jan. 31. The new acquisitions would raise that to a planned level of 13.2 EH/s.&nbsp;



Additional expansion at the Dalton site and at CleanSpark’s property in Sandersville, GA, would add an additional 0.8 EH/s and 6 EH/s in hash rate, respectively, according to the company. The acquisitions and expansions gives the firm the chance to hit a hash rate of 20 EH/s within the first half of 2024.



&#8220;With the addition of Mississippi to our portfolio, we are gradually increasing our geographic diversity and expect to apply our proven track record of success in this new and exciting operating environment,” CleanSpark CEO Zach Bradford said in a statement.&nbsp;



<a href="https://blockworks.co/news/marathon-mining-bitcoin-halving">Diversifying geographically</a>, as well as <a href="https://blockworks.co/news/hut8-mining-q2-earnings-revenue">opening up new revenue streams</a>, has proved a common strategy around the crypto mining segment, ahead of the next bitcoin halving. <a href="https://blockworks.co/news/bitcoin-halving-expected-on-4-20">Slated for April, the halving</a> is an event during which per-block rewards for mining bitcoin are set to drop from 6.25 bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) to 3.125 BTC.&nbsp;



Read more: <a href="https://blockworks.co/news/tracking-bitcoin-price-to-halving">Bitcoin price tracking ahead of the past 2 halvings — now 3 months to go</a>



CleanSpark’s acquisitions come after Marathon Digital closed a deal last month <a href="https://blockworks.co/news/bitcoin-mining-giant-gets-bigger">to buy two mining sites in Nebraska and Texas</a> for $179 million in cash. That acquisition gives Marathon a chance to double its hash rate to about 50 EH/s in the next 18 to 24 months, the company said.



Miners have also been investing in new equipment to prepare for the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>.



A dozen bitcoin <a href="https://blockworks.co/tag/mining">miners</a> had purchased roughly $1.2 billion worth of machines in 2023, as of early December, according to BlocksBridge Consulting. The acquired machines totaled more than 70 EH/s in capacity.&nbsp;



Read more: <a href="https://blockworks.co/news/crypto-miners-buying-machines">Crypto miners keep busy ahead of halving with accelerated machine buys</a>



CleanSpark committed last month to buying 60,000 Bitmain S21 miners, to be delivered between April and June. It also secured an option to buy 100,000 more machines at a fixed price by the end of the year. The deployment of all 160,000 machines would help CleanSpark achieve about 50 EH/s in hash rate.  



The deal is similar to Riot Platforms, which <a href="https://blockworks.co/news/riot-plots-hash-rate-growth">bought 66,560 MicroBT machines</a> in December. Riot has an option to buy 265,000 more machines as part of a plan that could help it increase its hash rate by 75 EH/s over the long-term.



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Ahead of halving, another bitcoin miner plots growth via site acquisitions

Katherine Ross

Bitcoin mining company CleanSpark plans to launch an in-house trading desk, according to Bloomberg.



CleanSpark CEO Zachary Bradford told the media outlet that the decision was made due to the large bitcoin balance held by the company. A November mining update shows that the company held 2,575 bitcoin.&nbsp;



CleanSpark didn’t immediately return a Blockworks request for comment on the move.&nbsp;



“It just makes financial sense to do it in-house,” Bradford <a href="https://www.bloomberg.com/news/articles/2024-01-02/bitcoin-miner-cleanspark-clsk-to-launch-crypto-trading-desk-in-2024?srnd=undefined">said</a>. He added that more miners may launch trading desks in-house “that way, you can manage it with your own risk profiles and expertise and keep a really close eye on it.”



The Nevada-based miner is a publicly traded company, trading on Nasdaq under the ticker CLSK. Over the past year, the stock is up 428%.&nbsp;



The move follows similar actions from other miners such as Marathon Digital which sold Bitcoin call options contracts, according to <a href="https://www.bloomberg.com/news/articles/2022-05-02/bitcoin-hoarding-miners-turn-to-options-market-for-cash-infusion">Bloomberg</a>.



But trading desks aren’t the only way for miners to broaden their revenue streams. Some have also <a href="https://blockworks.co/news/bitcoin-miners-new-markets">pivoted to offer high-performance computing</a>.&nbsp;



The companies, as Blockworks previously reported, are <a href="https://blockworks.co/news/crypto-miners-buying-machines">putting money to work with big machine buys</a> ahead of the bitcoin halving and a potential spot bitcoin ETF approval — or approvals.



Read more: <a href="https://blockworks.co/news/bitcoin-trading-on-etf-news">Bitcoin is trading on ETF news, but analysts caution on macro headwinds&nbsp;</a>



The US Securities and Exchange Commission is expected to give potential spot bitcoin ETF issuers an answer by Jan. 10 — which is also the agency’s due date to give Ark/21Shares an answer on its proposal.&nbsp;



In recent weeks, there’s been a flurry of meetings and filed amendments as issuers race to fill out the nitty gritty details — <a href="https://blockworks.co/news/planned-bitcoin-etf-updates">such as disclosing authorized participants and fees</a> — necessary prior to any potential launches.  



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) is currently trading around $44,000 after hitting a <a href="https://blockworks.co/news/2024-begins-bitcoin-price-45000">high not seen in nearly two years</a> on the first day of the year. 



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Bitcoin miner CleanSpark to launch in-house trading desk: Bloomberg

James Cirrone

Big bitcoin mining companies have been behind a massive increase in average network hash rate in the third quarter.



Seven companies are particularly driving the increase, including Bitdeer, CleanSpark, Marathon Digital, Cipher, Bit Digital, Bitfarms and HIVE. Collectively, these firms grew Bitcoin’s monthly average hash rate by 13.88 exahashes per second (EH/s) from June to September, according to TheMinerMag.



TheMinerMag put the total quarterly increase in monthly average hash rate at 38.19 EH/s. To put that in perspective, Bitcoin’s total hash rate is just <a href="https://blocksbridge.substack.com/p/public-miner-outgrow-bitcoin">over</a> 404 EH/s as of Monday.



Bitdeer was a standout among the rest, exploding its realized hash rate by over 120% in the third quarter. CleanSpark and Marathon also made significant gains on this front, each increasing computational power last quarter by around 43% and 38%, respectively.



All of this happened despite a record-breaking summer heat wave throughout North America that forced many miners to shut off their rigs so more power on the grid could be directed to households weathering 100+ degree temperatures.



Texas miner <a href="https://blockworks.co/news/riot-platforms-texas-mining">Riot Platforms racked up $31.7 million in power and demand response credits</a> from the state’s electricity operator in August.



Conversely, this strategy from Riot — shutting down a large portion of their operations in Texas — also likely contributed to its 14% decrease in realized hash rate last quarter, according to data from TheMinerMag. 



Here’s a peek at some of the top performers in the mining space and what they’re doing to advance more efficient operations.&nbsp;



<h2 class="wp-block-heading">Bitdeer</h2>



As mentioned, Singapore-based Bitdeer was the number one miner in terms of expanding its computing power.&nbsp;



A major factor in its success was its August completion of its 100 megawatt (MW) data center in Gedu, Bhutan, according to Bitdeer CEO Linghui Kong. 



Subsequently, Bitdeer was able to maintain “stable operations” at that site for the full month of September, Kong said in October.



“The number of Bitcoin mined through our self-mining business increased by 25.8% from the previous month, and almost tripled from the same period of the previous year, to 482 bitcoins,” Kong said in an Oct. 5 <a href="https://ir.bitdeer.com/news-releases/news-release-details/bitdeer-announces-september-2023-operations-updates">statement</a>. “During September, 217 bitcoins were mined at the Gedu mining datacenter, which was approximately 45% of our total bitcoin being mined for the month.”



Though <a href="https://blockworks.co/news/bitdeer-earnings-q2-singapore">Bitdeer booked a net loss of $40.4 million in the second quarter of 2023</a>, the company is still pursuing an aggressive growth strategy.&nbsp;



For example, the firm is in the midst of constructing a 175 MW immersion cooling data center in Norway. Bitdeer offered no indication as to when that will be completed.



<h2 class="wp-block-heading">Marathon Digital</h2>



<a href="https://blockworks.co/tag/marathon-digital">Marathon</a> has seen overwhelming growth throughout 2023. By August, it had installed enough hardware throughout its collection of data centers that <a href="https://blockworks.co/news/marathon-digital-earnings-q2">its lofty 23 EH/s goal is now within striking distance</a>.



Its US operational hash rate reached 15.8 EH/s in September, a 20% month-over-month increase, according to CEO Fred Thiel.



Beyond growth in mining power, Thiel also cited decreased curtailment as a reason why production has improved to 1,242 bitcoin last month — a 16% jump from August.



“The increase in bitcoin production from August was due to improved uptime and decreased curtailment activity in Texas,” Thiel said in an Oct. 4 <a href="https://ir.mara.com/news-events/press-releases/detail/1327/marathon-digital-holdings-announces-bitcoin-production-and">statement</a>.



Energization of Marathon’s facility in Garden City, Texas is still not complete, and the company is focused on increasing the mining efficiency of its location in McCamey, Texas.



In the medium term, Marathon also recently announced that it retired “the majority” of its convertible debt at a “significant discount,” which could put it in a stronger position for the bitcoin halving event in April 2024.



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Despite hideously hot summer, bitcoin miners manage 13 EH jump in hash rate

On Wednesday, CleanSpark released third quarter earnings, reporting an operating hash rate of 9 exahashes per second and a 47% revenue jump compared with the same period last year.&nbsp;



CleanSpark CEO Zach Bradford <a href="https://www.cleanspark.com/investor-relations/news-releases">announced</a> that the company’s year-end goal of reaching 16 exahashes per second (EH/s) is fully funded, which includes miners, facilities and other infrastructure, he said on an earnings call.&nbsp;



Bradford said CleanSpark is well positioned in the market and expressed excitement for the future of the world’s largest digital asset, citing <a href="https://blockworks.co/news/ark-21shares-strengthen-bitcoin-etf-filing">the recent spate of bitcoin spot ETF applications</a>. He expects approvals of bitcoin spot ETFs in “a matter of months, not years.”



This somewhat reflects Galaxy CEO Mike Novogratz’s statement on Tuesday that the process of the SEC reviewing these ETF applications <a href="https://blockworks.co/news/galaxy-digital-q2-earnings-2023">probably has a six month window</a>.



Bradford is in particular watching BlackRock, the largest asset manager in the world and <a href="https://blockworks.co/news/blackrock-files-bitcoin-etf">a major player in the race to a bitcoin spot ETF</a>. But he also pointed out that there are trillions of dollars worth of assets under management by the firms applying, which he said he believes could jumpstart bitcoin if the ETFs prove popular.



“[BlackRock’s] track record suggests that they believe there is a path to successfully launch an ETF. Now, although there can be no guarantee this will occur, if it does, we would expect to see substantial inflows of funds into Bitcoin,” Bradford said.&nbsp;



<h2 class="wp-block-heading">More on CleanSpark’s expansion plans</h2>



The Nevada-headquartered company boasts a total miner fleet of around 150,000 units, with another 60,000 on hand or pending delivery, Bradford said on the call.&nbsp;



Many of those miners are set to be a part of the expansion of CleanSpark’s data center in Sandersville, Georgia. The site currently operates at about 80 megawatts, but the upgrade will add 150 megawatts.



“We are now set to nearly double our hash rate in a matter of a few months with the expansion of Sandersville site,” Bradford said.&nbsp;



The additional miners that have been purchased and the buildup of Sandersville are fully funded, according to Bradford.&nbsp;



CleanSpark’s other sites in Georgia are also contributing to the hashing gains throughout 2023.



The data center in the city of Dalton, which CleanSpark acquired last quarter, is now running at “full capacity,” Bradford said.&nbsp;



CleanSpark also got the mining location in Washington up and running in July, which <a href="https://www.cleanspark.com/investor-relations/news-releases#collapsePost257">added</a> 50 megawatts of power and over 15,000 mining machines to its overall operation.



However, the company isn’t just focused on raw numbers of miners or mining locations. It’s also focusing heavily on efficiency.



As of July, its fleetwide efficiency was 29 joules per terrahash.



“This is good but not good enough for us,” Bradford said. “Once all the XPs that are on hand or ordered are plugged in and hashing, we expect to see our efficiency…coming in at approximately 25 joules per terrahash.”



CleanSpark’s stock is up roughly 150% year to date, though it’s down nearly 23% in the past month.&nbsp;



The stock, which trades under ticker symbol CLSK, closed at $5.05 Wednesday. It has a 52-week low of $1.74 and a high of $7.60.



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CleanSpark reports Q3 earnings, 16 EH/s is on the horizon

<div id="highlights-block_6369589c19e80" class="highlights">
 
</div>



A range of bitcoin miners are set to report third quarter results in the coming days as several companies in the mining sector are struggling to cope with financial pressures. 



Marathon Digital, Stronghold Digital Mining and Hut 8 Mining are among the companies in the space set to host earnings calls this week.&nbsp;



While analysts are not necessarily expecting big pronouncements of bankruptcies or acquisitions during industry players’ upcoming calls, they will be listening for how mining executives intend to navigate the current environment.



“I’m always listening for cues on expectations — company-specific and industry-specific — and specific companies’ moves to address their expectations,” Kevin Dede, senior technology analyst at HC Wainwright &amp; Co. told Blockworks.



<a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">Industry watchers told Blockworks</a> earlier this month that miner consolidation is imminent, as some of the larger miners in the space could look to scoop up struggling companies and their assets. 



But Lucas Pipes, managing director at B. Riley Securities, said miners in a solid financial situation are still likely to take a wait-and-see approach.&nbsp;



“They want to make sure they’re all secured and shored up and build that treasure chest to the extent they can,” he said. “Are you going to have exceptions to this rule? Yeah, you might.”



<h3 class="wp-block-heading">Keeping bitcoin mining rigs humming during crypto winter </h3>



Core Scientific revealed in <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001839341/5d07f815-c426-4db9-b79a-a38d616cf35a.pdf" target="_blank" rel="noreferrer noopener">filings</a> last month <a href="https://cms.blockworks.co/core-scientific-stock-price-plummets-70-as-it-considers-bankruptcy/" target="_blank" rel="noreferrer noopener">it was considering bankruptcy</a>, and Argo Blockchain followed by saying a potential capital injection of $27 million it was expecting <a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">had fallen through</a>. 



“The space is distressed,” Pipes said. “There’s no other way of putting it.”&nbsp;



Dede added that as it becomes harder to raise money in public markets, miners are being forced to purge assets.&nbsp;



Core Scientific said Monday that it sold 2,285 bitcoins at an average price of $19,639, as proceeds totaled roughly $45 million. The company held 62 BTC and about $32 million in cash, as of Oct. 31.



Core Scientific and Argo Blockchain have not yet listed earnings call dates.&nbsp;



Iris Energy is <a href="https://cms.blockworks.co/bitcoin-miner-iris-energy-says-its-bad-debt-contained-in-rotten-arms/" target="_blank" rel="noreferrer noopener">also in financial distress</a>. The Australia-based bitcoin miner said in an SEC filing last week that it can generate $2 million in monthly gross profit by mining bitcoin, while monthly principal and interest repayments on its debt stands at $7 million.



Bom Shin, vice president of corporate finance at Iris Energy, told Blockworks last week that the company’s debt is structured within a number of special-purpose vehicles (SPVs), which had a market value worth about 35% less than its principal loans outstanding as of September’s end.



The company was engaged in ongoing discussions with its unnamed lender, Shin added.



Iris Energy said that if it is unable to restructure the loans, two of its SPVs would have to default on the loans, which would likely result in the lenders foreclosing on the mining rig collateral, according to a Nov. 3 research note by Compass Point Research and Research analysts Chase White and Joe Flynn.



The analysts added that while Iris Energy’s stock price dropped following the news — and that the company may have a hard time getting equipment-backed financing in the future — they believe the company will be in a better financial situation after its negotiations with its lenders.



“We believe the market misunderstands the implications of the situation, which we see as a potentially significant positive for [Iris] that will allow it to continue to operate without the burden of expensive debt,” White and Flynn said.&nbsp;



In addition to the more recent struggles in the space, crypto mining data center operator <a href="https://cms.blockworks.co/compute-norths-business-goes-south/" target="_blank" rel="noreferrer noopener">Compute North filed for bankruptcy</a> in Texas in September.



Dede said he expects it will take a bit more pressure before more bankruptcies and consolidation take shape.



“You can expect to see some suffering for a while, I think,” he added. “I’m in no position to say how long this bear market lasts, but people who are running these companies should position themselves to endure a lengthy one.”



<h3 class="wp-block-heading">The space’s potential acquirers could wait to buy&nbsp;</h3>



Marathon Digital posted <a href="https://cms.blockworks.co/crypto-miner-marathon-digital-posts-192m-net-loss-in-q2/" target="_blank" rel="noreferrer noopener">a net loss of $192 million</a> during the second quarter and is set to report its third quarter earnings on Tuesday at 4:30 p.m. ET. 



The company said on Nov. 2 that it added about 32,000 miners last month to raise its hashrate to roughly 7 exahashes per second (EH/s). It also produced a record 615 bitcoins in October, increasing its total holdings to 11,285 BTC.



Marathon seeks to hit roughly 13 EH/s by the end of 2022 and 23 EH/s by mid-2023, Marathon CEO Fred Thiel told Blockworks.



Thiel said last month that Marathon would keep an eye on cheap assets from struggling miners. He noted that the company could look to purchase a hosting site, for example, if such a buy made strategic sense.



Riot Blockchain is another company that has expressed interest in acquisitions, as CEO Jason Les called his firm <a href="https://cms.blockworks.co/riot-blockchain-ceo-firm-is-one-of-mining-spaces-best-positioned-acquirers/" target="_blank" rel="noreferrer noopener">one of the segment’s “best-positioned acquirers.”</a>



The company produced 509 bitcoins in October and held 6,825 BTC, as of Oct. 31. It seeks to reach 12.5 EH/s during the first quarter of 2023. Riot has a special meeting of stockholders set for Nov. 17.



Frank Holmes, executive chair of HIVE Blockchain Technologies, <a href="https://cms.blockworks.co/ex-eth-miner-hive-blockchain-eyes-buying-opportunities-post-merge/" target="_blank" rel="noreferrer noopener">told Blockworks</a> in September that his firm would be evaluating buys of equipment, and potentially mining firms, over the next six months. 



Cleanspark said on Nov. 1 that it acquired 3,843 units of Antminer S19J Pro bitcoin mining machines for $5.9 million. The machines appeared to have come from Argo Blockchain, which reported selling the same number of S19J Pro units last week.&nbsp;



Pipes said though he believes “we’re getting close” to seeing more mergers and acquisitions in the space, there are often relatively few operational synergies to take advantage of.&nbsp;



He added that Riot is likely in the best financial situation of any miner, while Marathon is also in a position to take advantage of opportunities. But, he noted, those companies may want to focus on their ambitious hashrate targets.



“I think it’s first things first — execute on the existing growth plan before you take precious capital to add in more growth that may not be as attractive as what you have planned for anyways” Pipes said.&nbsp;



<h3 class="wp-block-heading">Other miners to keep an eye on</h3>



After Marathon’s earnings call on Tuesday, Stronghold Mining and Hut 8 Mining are scheduled to host their own on Wednesday at 5:00 p.m. ET and Thursday at 10:00 a.m. ET, respectively.&nbsp;



Canada-based miner Bitfarms is set to report its third quarter results on Nov. 14 at 11 a.m. ET



Stronghold said last week that it eliminated all outstanding principal — totaling about $67 million — under its equipment financing agreements with NYDIG and The Provident Bank.&nbsp;



Stronghold CEO Greg Beard said in a statement that the company was rapidly deleveraging its balance sheet and enhancing liquidity to pursue acquisitions of bitcoin miners at attractive prices. Stronghold had roughly $30 million of liquidity in cash and bitcoin, as of Nov. 1.



Meanwhile, Hut 8 Mining produced 299 bitcoins in October to raise its holdings total to 8,687 BTC. Its installed hashrate capacity was 3.07 EH/s at the end of the month.



Hut 8 CEO Jaime Leverton said during Blockworks’ Digital Asset Summit in September that acquisitions are not necessarily the best thing in the current market environment, as the company can buy new machines at attractive prices.



Bitfarms, <a href="https://cms.blockworks.co/crypto-miner-bitfarms-sells-half-its-bitcoin-to-reduce-debt-boost-liquidity/">which resorted to selling bitcoin</a> earlier this year, mined 486 BTC in October and sold all of it.



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