US-based clean energy Bitcoin miner CleanSpark (US:CLSK) rose 14.4% in trading on Tuesday after announcing plans to double its cryptocurrency mining capacity through the acquisition of 45,000 Antminer S19 XP bitcoin mining machines. Even with the latest rally, CLSK shares are still trading around 70% lower on a 1 year basis.
The transaction which is valued at $145 million will add over 6.3 exahashes per second (EH/s) of computing power to the company’s current hashrate of 6.7 EH/s, increasing its total computing power by 95%.
Exahashes per second (EH/s) is a unit of measurement used to indicate the total computational power being used to mine Bitcoin. One exahash is equivalent to one quintillion hashes per second, and it represents an enormous amount of processing power.
The more exahashes per second a Bitcoin miner has, the higher its chances of successfully mining a block and earning Bitcoin rewards. The exahash rate is a key metric in understanding the competitiveness of the Bitcoin mining industry and the level of difficulty of mining new Bitcoin blocks.
As a result, companies like CleanSpark are working to increase their exahashes per second to remain competitive and profitable in the Bitcoin mining industry.
Powerful Rigs
The acquisition of the 45,000 Antminers will be deployed at its Bitcoin mining facility in Sandersville, Georgia, which is currently undergoing a planned 150 MW expansion. CleanSpark expects the mining machines to be fully operational before the end of 2023.
According to CleanSpark’s CEO, Zach Bradford, the Antminer S19 XP is the most power-efficient Bitcoin mining machine available in the market today and will play a crucial role in solidifying CleanSpark’s position among the top Bitcoin mining companies in America. Bradford also stated that the company’s technical expertise, operational efficiency, and treasury management strategy will be critical in achieving this objective.
CleanSpark mines Bitcoin predominantly with low-carbon energy sources, which account for over 90% of its energy mix, and continues to follow a balanced capital management strategy by selling a portion of its mined Bitcoins to reinvest in growth. The company’s proprietary mining model has allowed it to achieve one of the highest hashrate realization rates among its peers since January 2022.
The chart below shows the Bitcoin hashrate realization by companies for March. The chart shows that CLSK currently has the second-highest hashrate in the market.
According to Gary Vecchiarelli, CleanSpark’s CFO, the recent mining rig acquisition is an important step toward the company’s target of 16 EH/s by year-end. The company’s ability to make timely purchases based on ROI metrics is due to a capital strategy that maintains flexibility as its core tenant, allowing it to capitalize on accretive opportunities in the marketplace.
CleanSpark’s CFO also stated that securing the XP rigs at these prices means the company has one less variable in its capital expenditure equation, putting the company well on its way to achieving its year-end guidance.
Cantor Fitzgerald analyst Josh Siegler thinks that CleanSpark’s management has “negotiated a best-in-class deal” with attractive prices for highly efficient mining rigs. The analyst thinks that CLSK will become a Top Two vertically-integrated miner by scale. The firm maintained its bullish stance on the stock with its ‘overweight’ call and target price which increased to $6 from $5.
Fintel’s consensus target price of $7.65 suggests CLSK’s share price could rally almost 150% over the next year.
Analysts forecast a strong trajectory of revenue growth over the next three-plus years as shown in the chart above.
Attracting Institutions
One positive about CLSK revealed by research on the Fintel platform has been the growing level of institutional interest in the stock. This has been described by a bullish Fintel Fund Sentiment Score of 78.28 which ranks CLSK in the top 20% out of 36,206 globally screened securities.
The chart below shows the growing level of institutional share ownership over time vs the CLSK share price.
Attractive Miners
Since the beginning of 2023, the price of BTC vs USD has risen about 80% to around $30,000 per coin. The coin price recovery was aided in March by the U.S. banking crisis and fallout which drove investors to question the stability of the sector and to start thinking about Crypto again as a store of value.
Meanwhile, ARK Invest’s Cathie Wood is still holding by her forecast that the world’s biggest crypto token by market cap could reach $1.5 million by 2030.
As a result, many Crypto miners and related stocks have begun recovering from all-time low prices. Now could be the time to begin looking at some of these stocks trading at deeply depressed valuations.
A few stocks in the sector are mentioned below with their one-year rolling capital share price return:
This story originally appeared on Fintel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
