What happened
Cryptocurrencies and crypto-related stocks moved higher today after the price of the world’s largest cryptocurrency Bitcoin (BTC 1.97%) moved past $30,000, a level it hasn’t crossed in 10 months.
Shares of the Chinese Bitcoin-mining company Canaan (CAN 12.74%) traded roughly 12% higher as of 12:04 p.m. ET today, while shares of CleanSpark (CLSK 14.39%) traded roughly 11.1% higher. Shares of the Canadian miner Bitfarms (BITF 14.58%) were up 8.3%.
So what
The big story of the day is the price of Bitcoin surging past $30,000. The token is up close to 82% this year in what has been a spectacular rally after a difficult year in 2022.
A lot of what’s been driving Bitcoin this year appears tied to monetary policy and macro events. Rising interest rates crushed Bitcoin in 2022. Now, with the Federal Reserve expected to end its intense interest-rate hiking campaign soon, investors are looking ahead to a more favorable environment for riskier assets.
The recent banking crisis and weakening dollar also seem to be fueling the rise in Bitcoin, which tends to benefit from disruptions in the mainstream financial system because it was launched during the Great Recession as an alternative currency. There have also been renewed calls that Bitcoin can act similarly to gold, which has also seen its price increase as many investors prepare for what could be a more severe recession than initially expected.
However, there was also some company-specific news today. CleanSpark announced that it has purchased 45,000 new Antminer S19 XP Bitcoin-mining machines for close to $145 million. This move is expected to nearly double the company’s Bitcoin-mining capacity.
The machines are expected to be ready before the end of September, increasing the company’s hash rate, or computing power, by 6.3 exahashes per second. The company’s current hash rate is 6.7 exahashes per second, so this will make a big difference. Computing power is everything when it comes to Bitcoin mining.
CleanSpark’s CEO Zach Bradford said in a statement:
The Antminer S19 XP is the most power-efficient bitcoin mining machine available in the market today, and a key component in our continuing work to build some of the most efficient Bitcoin mining facilities in the country. As bitcoin’s halving draws closer, our focus on operational efficiency, our technical expertise, and our treasury management strategy, will all play a crucial role in solidifying CleanSpark’s position among the top bitcoin mining companies in America.
In other news, Bitfarms said today that it would pay $1.8 million in a part-cash, part-stock deal to acquire 22 megawatts of hydropower capacity at a facility in Quebec. Once fully up and running, the new hydropower is expected to increase Bitfarms’ computing power by 600 peta hash per second, which is equivalent to 0.6 exahash.
Now what
When the price of Bitcoin moves higher, most of the industry tends to follow, especially Bitcoin miners because the asset they are mining is getting more valuable. Also, several of these companies have made moves over the crypto winter to improve their operations.
But Bitcoin-mining stocks can be very volatile. While they should benefit from a rise in the price of Bitcoin, I’d personally prefer to simply own Bitcoin.