The crypto winter has hit the mining business
Bitcoin miner CleanSpark has slashed its 2023 year-end hashrate by an astonishing 30% The mining firm has reduced computing power guidance to 16 exahash per second (EH/s), from 22.4 EH/s. CLSK has cited its partner ‘Lancium’ the reason behind the delay in delivering mining services and facilities.
The miner had announced a partnership with Lancium – an energy supply management firm. The deal was to offer for 200 megawatts (MW) of electricity capacity in West Texas, US. This is equivalent to 6.6 EH/s of hashrate, with an option for an additional 300MW in the future.
Later, the firm communicated that due to lack of capital they won’t be able to deliver the proposed deal. The expected date of completion is now moved to the approaching year which has led CLSR to cut the guidance for the miners.
Additional Read: Bitcoin Price Prediction
Why is crypto mining bleeding?
The prolonged crypto winter has led the top PoW crypto asset Bitcoin [BTC] to slump to its lowest. This in turn has dramatically decreased the revenue of Bitcoin miners. In addition to the plummeting price of crypto assets, energy costs have skyrocketed in the past few months. To add fuel to the fire, Ethereum’s upgrade from ‘Proof of Work’ to ‘Proof of Stake’ also hit the miners and the mining ecosystem.
In light of these events, a crypto mining service provider Compute North filed for bankruptcy in the US. While other mining companies like Core Scientific (CORZ), Argo Blockchain (ARBK) and Greenidge Generation (GREE) have hinted at a financial liquidity crunch.
A look at the balance sheet of CleanSpark
According to the mining data center, CLSR, the firm’s fourth-quarter revenue rose to 235% while its net loss widened by 683%. However, shares of Cleanspark saw a slight dip of 2% which is menial as compared to its competitors Core Scientific (CORZ) and Marathon Digital (MARA) who have recorded a decline in shares by a staggering 80%.
A glimpse of CLSR’s history
Cleanspark started offering energy products to homes and businesses in 2014. The firm entered crypto mining in 2020. According to a press release, the firm’s 90% revenue came from Bitcoin mining. The firm had raised its hashrate guidance for 2022 to 5 exahash/second (EH/s), and issued guidance for the end of 2023, when it expects to reach 22.4 EH/s.
Cleanspark distinguishes itself from other mining centers as they have been a consistent seller of mined bitcoin to raise cash. Since the firm took the acquisition route to enter crypto mining they entered the bear market with less debt.
Additional Read: Bitcoin Hash Rate
Statements from CLSR’s horse’s mouth
“Our business model and capital strategy continue to be standouts in our industry,” said Zach Bradford, CEO, Cleanspark. “Despite macro headwinds in the economy and bitcoin mining industry, our infrastructure-first approach and financial discipline have allowed us to grow in this bear market. We continue to execute our business plans with best-in-class efficient mining operations and by identifying potential accretive acquisitions while maintaining very little leverage on our balance sheet. This team continues to exceed my expectations and I’m so proud of them, he added’’.
2023 Outlook and Commentary
The Management had scheduled a conference call to discuss plans for 2023, including a revision to its calendar 2023 year-end guidance. Lancium had agreed to build clean campuses for mining in west Texas to host 200 MW, or about 6.6 EH/s. The Company will hold its fourth quarter and year-end 2022 earnings report for investors and analysts today, December 14, 2022, at 4:30 p.m. ET (Eastern Time)
Source: CoinDesk, PR Newswire