Bitcoin Mining Is Harder Than Ever CleanSpark Expands

CleanSpark acquires 7 new mining facilities in East Tennessee, consolidating operations in new region. These investments come at a difficult time for Bitcoin miners.

The company hopes to close some facilities before the end of the month to carry out long-term planning improvements.

Tennessee Mining Center

On September 11, Bitcoin miner CleanSpark announced that it will acquire seven new mines in East Tennessee. CleanSpark is a low-carbon mining company that primarily uses renewable electricity to power its operations, making East Tennessee a very attractive destination.

According to court documents related to CleanSpark's latest acquisitions, all seven facilities are mining operations that have undergone ownership changes. In other words, CleanSpark is strengthening the local mining infrastructure, not expanding it as a new hub.

These acquisitions totaled $27.5 million, and CleanSpark will close these sites before the end of the month. After this shutdown, CleanSpark will conduct a series of upgrades, using S21 pro miners to “increase the company's current hashrate by over 22 percent,” according to the press release.

“With this additional 5 EH/s expected to start hashing in the coming weeks, we expect to achieve 37 EH/s before the end of 2024. As we discussed earlier, our timing on mining server purchases has been intentionally locked. At low cost, we can take advantage of such opportunities and immediately fill the available data center space.” We can,” said Zach Bradford, CEO of CleanSpark.

Bitcoin miners have moved to East Tennessee in the last couple of years for a variety of reasons. The region is attractive to new investors due to cheap land and friendly mining regulations. However, it is the vast hydroelectric infrastructure that makes large-scale Bitcoin mining possible.

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Since the 1930s, the Tennessee Valley Authority (TVA) has maintained a formidable hydroelectric grid in the region. Therefore, the area has relatively few coal-based power plants. This makes East Tennessee especially attractive to an organization like CleanSpark.

As Bradford himself puts it, “Tennessee has a similar political and energy environment to Georgia, where we have deployed approximately $1 billion in capital and operated approximately 500 MW. The investment, in other words, can be the first step. If CleanSpark's new facilities are successful, it could further strengthen the crypto mining infrastructure in the region.

Bitcoin mining is difficult

However, several obstacles stand between CleanSpark and a long-term infrastructure development project. According to Bradford, this purchase was to close a deal when the asking price was too low.

New data suggests that mining difficulty is at an all-time high, following Bitcoin's price drop. When mining difficulty is high, it means that more miners are competing, which increases the energy and resources needed to mine new blocks. If the price of Bitcoin falls during this period, it may be less profitable for miners.

This poses a risk because miners may struggle to cover operational costs, especially if they rely on the value of Bitcoin for their income. In some cases, sustained high difficulty and low bitcoin prices could cause miners to stop working, according to investment bank Jefferies in a research report.

“September is shaping up to be another rough month as BTC remains below $60k and network hashrate continues to rise,” Jefferies analysts said.

These broader economic downturns coincide with difficult times for CleanSpark itself. The company's stock price is constantly declining and may be crossing critical levels. In particular, CleanSpark's short-term moving average has nearly crossed its long-term moving average, a so-called “death cross,” indicating a long-term bearish trend.

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These price movements could shake investors' confidence in a context of increasing difficulty for the entire industry.