CleanSpark’s Bold $155M Gamble on Griid Amid Bitcoin Shake-Up

In a notable development in the cryptocurrency mining industry, CleanSpark, a sustainability-focused Bitcoin miner, announced its ambitious plan to acquire Griid Infrastructure. The deal, valued at $155 million, involves CleanSpark purchasing all common shares of Griid, which sent shockwaves through the market, resulting in a sharp 49% drop in Griid’s share price to $1.20.

Despite this tumultuous response, Griid’s stock had previously experienced a 55% rally over the last month, underscoring the volatile nature of mining stocks. The merger includes an allocation of 20 megawatts (MW) of currently available power from Griid to CleanSpark, which anticipates a significant expansion of its power capacity by over 400 MW in the next two years.

Zach Bradford, CEO of CleanSpark, highlighted the strategic value of the merger, citing Griid’s “impressive pipeline” of energy infrastructure across Tennessee, which complements CleanSpark’s existing operations in Georgia and Mississippi. This acquisition, he noted, provides a “clear and steady path” for the company’s growth over the next three years.

In addition to bolstering its presence in the United States, CleanSpark has been actively expanding, with new mining facilities planned in Wyoming and ongoing operations in New York. The deal also entails CleanSpark assuming all of Griid’s outstanding debt, further providing $5 million in working capital and a substantial bridge loan to facilitate the transition.

Founded in 2018, Griid has established a reputation for its community-focused approach to building data centers, particularly in Watertown, New York, and various locations in Tennessee. This philosophy aligns with CleanSpark’s sustainability ethos, potentially enhancing the merged entity’s community integration and operational efficiency.

Meanwhile, the transaction appears to have had a minimal impact on CleanSpark’s stock, which saw a slight increase of 0.44%, trading at $16.15. This merger unfolds against the backdrop of the broader Bitcoin mining industry grappling with the effects of the Bitcoin halving event in April, which reduced profitability by cutting the rewards for mining.

The consolidation trend in the mining sector is further illustrated by other ongoing dynamics, such as the attempted hostile takeover of Canadian firm Bitfarms by Riot Platforms, highlighting the competitive and strategic shifts within the industry.

Both CleanSpark and Griid’s boards have shown rare unanimity in their support for the merger, which is expected to close in the third quarter of this year. This strategic alignment could set a precedent for future consolidations as companies adapt to the evolving landscape of cryptocurrency mining.