Bitcoin Miner CleanSpark to Buy Peer GRIID in $155M Deal

As an experienced analyst following the Bitcoin mining industry, I see CleanSpark’s (CLSK) acquisition of GRIID Infrastructure (GRDI) as a strategic move that will strengthen CleanSpark’s position in the market. With an enterprise value of $155 million in this all-stock deal, CleanSpark is poised to take on GRIID’s debt and obligations while providing a bridge loan of $5 million.

As a financial analyst, I’ve noticed the surge in Bitcoin mining deal-making, and the latest addition to this trend is CleanSpark’s (my portfolio holding, CLSK) announcement of an all-stock acquisition of GRIID Infrastructure (GRDI), valued at approximately $155 million.

In simple terms, CleanSpark will take over GRIID’s debts and other liabilities, while extending a $5 million bridge loan to help pay down around $50.9 million that was owed. (Statement released on Thursday)

“CleanSpark’s CEO, Zach Bradford, stated that this acquisition will provide us with a defined and unwavering route for the next three years to replicate in Tennessee the success we experienced in Georgia during the past three years,” he explained. “Our triumph in Georgia involved constructing approximately 400 MW of infrastructure supported by beneficial, long-term power agreements.”

Following the announcement, the value of GRIID’s shares dropped by over 50%, contrasting with CleanSpark’s shares experiencing a almost 4% increase. This disparity suggests that investors view the transaction as a potential bargain or fire sale.

The news emerges as the Bitcoin mining sector has seen a surge in mergers and acquisitions (M&A), with activity escalating after the latest halving event that intensified competition in this already robust industry. Most recently, Riot Platforms (RIOT) and Bitfarms (BITF) have engaged in a hostile takeover bid, while Core Scientific (CORZ) is reportedly on the verge of being acquired by a major cloud computing firm.

As an analyst, I’d interpret the announcement as follows: The deal is projected to be finalized during the third quarter of the year. Moreover, CleanSpark intends to surpass 100 Megawatts (MW) of capacity in Tennessee by the end of this year. They plan to expand this capacity to reach 200MW by the next year and aim to increase it further to over 400MW by 2026.

As a crypto investor, I’d interpret this news in the following way: The companies have reached an arrangement with me, granting CleanSpark access to 20 MW of power capacity.

Founded in 2018, GRIID made its Nasdaq debut this year following a series of setbacks caused by the severe cryptocurrency market downturn. The mining company operates at three locations: Watertown, New York, and Lenoir City and Maynardville, Tennessee.