This week, bitcoin mining executives spoke out about industry consolidation and M&A. Peter Wall, Argo Blockchain CEO, stated that asset deals are more common than traditional mergers or acquisitions in the bitcoin mining industry. According to industry executives, consolidation in the bitcoin mining sector is still in its infancy.
Argo Blockchain CEO Peter Wall said Tuesday that the industry will likely reach a “pain points” in the fourth quarter, with more transactions occurring — if it continues on the same trajectory.
These comments were made days after CleanSpark, a bitcoin miner, announced that it had acquired a second mining facility in less than a month.
“That’s a very important first in this space. Jaime Leverton (CEO of Hut 8), stated that it is definitely early days. “We have seen miners selling bitcoin (…), and sell infrastructure to pay some of their capital obligations. You can see real opportunities for M&A or consolidation when you have run out of things you want to sell.
In a report released this week, Gregory Lew, BTIG analyst, stated that “market stress” is causing the market to bubble up. However Gregory Lew, BTIG analyst, said that it was “too early” for the M&A cycle “to start.”
He said that selling non-core infrastructure sites (as we saw last week), to increase liquidity is logical in the short-term.
Cleanspark buys 16,000 miners
CleanSpark was able to capitalize on current market conditions by scoring more than 16,000 mining machines at an affordable price since June, and closing deals for two sites in Georgia from Waha Technologies (Nasdaq-listed Mawson Infrastructure Group).
Argo’s Wall believes that there will be more asset transactions than M&A deals in the future. He also saw this in previous market cycles, such as Riot’s purchase of Whinstone (a Texas facility that was previously owned by Northern Data).
He said, “All of us carry baggage, all have management teams, and some of us are in debt.” “How to put them together is more complex so if your ability to acquire either infrastructure, rig and remove all the baggage, then it would be a fortress.”
According to a recent analyst notice from Chardan Research, CleanSpark’s acquisition “improves operational leverage” and drives hashrate growth “beyond Street expects.”
The Chardan analysts stated that CLSK would likely continue to be opportunistic and pursue similar bolt-on acquisitions.
Cleanspark CEO Zach Bradford says they are taking advantage of what the market offers
CleanSpark CEO Zach Bradford stated last month that the market had been planning for consolidation all summer and that he was happy to be on the acquiring end. “Our focus on sustainability has placed us in a unique position, allowing us to capitalize on the unimaginable opportunities the current market offers.
Mawson’s chief Commercial Officer Nick Hughes-Jones stated to The Block that the agreement was a win-win situation for both sides. CEO James Manning added that the company would now be focusing its efforts on other US facilities.
Leverton stated that who will emerge victorious in the end of market turmoil subsiding is dependent on how well companies prepare for it.
He said, “Those who have healthy balance sheets and are well-off in this space, I believe, are best positioned to use this market to grow and emerge stronger.
Many bitcoin miners suffered significant losses in the second quarters. CleanSpark reported $29.3 Million in net losses in its most productive quarterly quarter. This was in relation to bitcoin mined (964 BTC), a 7% increase compared to the previous quarter.
In recent months, bitcoin miners have seen their margins shrink due to falling bitcoin prices (around half off in the last six months) as well as rising power prices. According to data from The Block’s Data Dashboard, monthly mining revenues have been declining steadily since October last year. They are now $1.72 billion and $656.97 millions respectively.